Economics: Growth in aggregate demand in the 2nd quarter concentrated in total investment and private consumption

MEXICO - Report 25 Sep 2023 by Mauricio Gonzalez and Francisco González

The aggregate supply and demand figures for the second quarter, released on September 18, showed very significant gross fixed capital formation growth in construction and in the imported machinery and equipment component, as well as in private consumption. Within private consumption, very high growth has been observed in spending on imported goods while consumption of domestic goods has been stagnant in recent months. This pattern was repeated both in the second quarter and in July of this year, largely due to the effect of exchange rate appreciation. Regarding construction investment, significant increases were observed in both its public and private components. However, its main source of strength remains the historically high rates of growth seen in civil engineering works, which are concentrated in the public sector.

In this week’s Outlook section, we analyze the recent behavior of aggregate demand and its main components, as well as its growth prospects for the coming year.

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