This Friday, the global economy indicator (IGAE ) was released in Mexico which, in November 2019, experienced a 1.2% drop at the annual rate. This fall is higher than expectations, as the market expected a 0.7% drop; Banorte (MX: GFNORTEO ), for example, expected a contraction of 0.2%.
The importance of this indicator is that it provides an early estimate of the behavior of the GDP of Mexico, it is calculated by taking the monthly economic activity index, using the production of specific sectors and price information and, often, influences the economic policy in the country.
When reviewing the figures adjusted for seasonality, this data indicates that the Mexican economy barely grew 0.1% in November compared to October 2019.
“The report (from the IGAE) confirms that the weakness continued in the fourth quarter of 2019,” explains Banorte Financial Group in its report today.
“Contrary to expectations, performance was negative despite the support product of the industry’s rebound. In this sense, our concern about the services sector has increased in the margin, with the information available on December suggesting that difficulties prevail ”, explains Banorte in the same report.
In the monthly comparison, the economy grew just 0.1%, without reversing the contraction of the previous month, Banorte added. “This is explained by a zero advance in services (0.0%), with 5 of its 9 subsectors in contraction. Inside, the most significant falls were in wholesale sales (-1.2%) and recreational services (-1.0%),” the analyst commented.
However, as a positive point, the General Indicator showed a monthly progress of 0.1%, showing the possibility of a recovery in the coming months.
The projections in CiBanco indicate a stronger contraction, close to 0.25%, due to the fact that the accumulated from January to November 2019, the economic activity of Mexico registers a contraction of 0.2%.