The National Institute of Statistics and Geography (INEGI) published the figure for the Gross Domestic Product (GDP) for the first quarter of 2024. The economy expanded 2.0 percent in annual terms, highlighting the solid growth of tertiary activities (services) of 2.5 percent.
For their part, primary and secondary activities showed expansions of 1.3 and 1.5 percent, respectively. However, with seasonally adjusted figures, the economy only grew 0.2 percent in quarterly terms. Internally, the primary and secondary sectors presented contractions of 1.1 and 0.4 percent, respectively. In contrast, tertiary activities expanded 0.7 percent compared to the fourth quarter of 2023.
With original figures, GDP would have grown 1.6 percent annually during the first quarter of 2024. This data is positioned well below the annual data that was observed throughout 2023. The annual growth in 2023 was 3.2 percent annually, exceeding market expectations.
Thus, the growth rate for the first quarter of 2024 is the lowest since the fourth quarter of 2021 (the year of recovery from the pandemic). The data that is harming future growth expectations is the weakness of the industrial sector, which grew only 0.8 percent annually in the first quarter of 2024, contrasting with an expansion of 3.5 percent annually in 2023.
The moderation in the growth rate is occurring in an environment of slowdown in US industry, due to high interest rates that are slowing consumption in that country. Likewise, a more appreciated exchange rate is harming exports, in addition to reducing the benefits of the multiplier effect of remittances and tourism.
But the most serious problems are structural. The deterioration in the quality of education in the country, evidenced by poor PISA test results, low investment in science and technology, and heterogeneous investment in infrastructure are harming expectations for future growth.
Without productive investment in energy generation to increase installed capacity and without increasing the quality of education, it will be difficult to observe significant growth rates in the future. The IMF estimates a lower growth rate for Mexico in 2025 due to these structural problems and an expected fiscal consolidation, given a scenario of a high fiscal deficit this year.
The author is general director of GAMMA Financial Solutions and professor of Economics and Finance at EGADE Business School. He has a PhD in Finance and a Master’s degree in Financial Economics, both from the University of Essex in the United Kingdom.
