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Private consumption weakened while GFI expanded at a decent pace.
2024/07/02 | Julio Ruiz

Gross Fixed Investment (GFI) expanded 18.1% yoy in April (vs. market consensus of 17.9%), while private consumption rose by 8.0% (vs. market consensus of 8.1%). The GFI figure was partly driven by a favorable calendar base effect (Easter holidays). In fact, adjusting for working days, GFI grew 10.2% YoY in April, taking the quarterly annual rate to 10.6% (from 11.4% in 1Q24). According to the seasonally adjusted series, GFI expanded at a decent 0.9% MoM/SA in April, driven by construction investment (mainly private), while machinery & equipment weakened. GFI momentum improved, with the qoq/saar at 7.2% in April (from 1.2% in 1Q24). Meanwhile, private consumption weakened, falling by 0.9% MoM/SA. The qoq/saar of private consumption stood at a resilient 6.6% in April, although slowing from 8.8% in 1Q24.


Our take:  Looking forward, we expect GFI to lose momentum as fiscal expenditures associated to public infrastructure softens in the 2H24, after elections and amid the transition between administrations. While private consumption will also likely expand at a softer pace in the 2H24, the recent depreciation of the currency (generated by greater political uncertainty) will boost remittances in MXN and could give some support to private consumption. Still, we recently noted a downside bias to our GDP growth forecast of 2.3% for 2024, after a weaker than expected monthly GDP figure for April.


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