Economics: Recent data points to further slowing in activity, with a slight rebound in inflation

MEXICO - Report 30 Jan 2023 by Mauricio Gonzalez and Francisco González

As we conclude the first month of 2023, we have been presented with evidence of cooling activity in key indicators. After consumption had been especially strong in the second and third quarters, consumer spending faltered in the two most recent months for which Inegi data is available, including in November, with that month's "Buen Fin” failing to deliver the major revenue boost it had generated every year since that annual nationwide shopping event was inaugurated in 2011. Economic activity for November as measured by the IGAE fell 0.5% on a seasonally adjusted monthly basis, mainly due to the worrying contraction registered in services (-0.9%).

In terms of the economic projections for this year we are reiterating our flat 2023 US growth estimate while reaffirming the macroeconomic framework with a scenario involving a 0.7% reduction in Mexico's GDP. We also continue to anticipate a slowing of annual inflation, although those rates are expected to remain well above Banxico’s tolerance range.

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