MEXICO – Solid sequential GDP in 2Q21

Services sector supported the GDP expansion amid the reopening of the economy

Julio Ruiz


Annual GDP growth in 2Q21 reflects mainly a favorable effect (strict social distancing a year ago), but there was also a strong sequential gain. The GDP in 2Q21 grew 19.6% year over year (broadly in line with the GDP flash estimate, published by the statistics institute, and consensus of 19.7% and below our forecast of 20.6%). Using calendar adjusted figures (published by the Statistics Institute), GDP grew at the same pace, with industrial production growing a large 27.9% in 2Q21 (from -1.9% in 1Q21), while services sector grew 17.1% (from -3.4%).

Sequential GDP in 2Q21 grew at a solid pace, supported mainly by the easing of social distancing measures. Using seasonally adjusted figures, GDP grew 1.5% quarter over quarter, while sequential GDP in 1Q21 (1.1%, from 0.8% previously), 4Q20 (3.3%, from 3.2%) and 3Q20 (12.7%, from 12.5%) were revised to the upside, taking the statistical carry-over in 2Q21 to 5.8%. The quarterly GDP was driven by the services sector (2.0% quarter over quarter), reflecting the reopening of the economy.  On the other hand, industrial output stood at 0.3% quarter over quarter dragged by a soft construction and manufacturing output (still reflecting the global microchip supply disruption), at 0.0% and 0.1%, respectively. The IGAE (monthly GDP proxy) fell in June by 0.9% month over month.

We expect GDP growth of 6.5% for 2021, supported by U.S. expansion and economic reopening. However, a further delay in the normalization of the global microchip supply disruption is a downside risk to our outlook. The services sector will continue supporting the recovery during the rest of the year if mobility is not affected significantly by the resurgence of the outbreak.   

Julio Ruiz