The 4Q23 GDP flash estimate, published by Mexico’s statistics institute (INEGI), came in at 2.4% yoy, below market consensus of 3.0% (as per Bloomberg) but broadly in line with our forecast of 2.3%. According to calendar & seasonally adjusted data reported by INEGI, GDP in 4Q23 grew at the same pace as the unadjusted series, down from 3.3% in the previous quarter. At the margin, GDP expanded at a soft 0.1% qoq/sa, after growing at a resilient pace in the first three quarters of the year (average of 0.9%). Activity was dragged by industrial production which registered a null expansion (likely associated to the construction sector losing steam and a soft manufacturing output), while services sector grew at a soft 0.1%. We also note primary sector fell by 1.1%.
Our view: The GDP flash estimate reaffirms our expectation of a softer than expected expansion in activity in 4Q23, placing a downside bias to our 2023 GDP growth forecast of 3.4% (using preliminary data from INEGI at 3.1%). Next year, we expect activity to continue to grow at an above trend growth of 2.8% supported by an expansive fiscal stance. Benefits from nearshoring may also support activity this year.
Julio Ruiz