Industrial production (IP) posted a practically null annual expansion in December, below our forecast of 0.9% and market consensus of 1.2% (as per Bloomberg). The figure was dragged, in part, by an unfavorable calendar base effect. In fact, using calendar adjusted figures, IP expanded 0.9% yoy, taking the quarterly annual rate to 3.0% in 4Q23 (from 4.5% in 3Q23). At the margin, IP fell by 0.7% mom/sa in December, dragged by manufacturing output (-1.2%), while construction sector fell by 0.6% (reflecting the culmination of AMLO’s large infrastructure projects that had boosted construction throughout the year). Sequential industrial production momentum weakened, as reflected by the qoq/saar of -1.1% in 4Q23 (from 4.7% in 3Q23), with manufacturing and construction sectors at -1.6% and 1.4%, respectively.
Our take: Today’s weaker than expected IP figure will likely drag slightly the final GDP number for 4Q23, which flash GDP estimate (published by INEGI) stood at 0.1% qoq/sa. Still, our GDP growth forecast for 2023 stands at 3.1%. For 2024, we forecast GDP growth of 2.8% supported by an expansionary fiscal stance and a supportive external demand. Benefits from nearshoring may also be a more relevant driver for the economy this year.
See detailed data below
