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Leading
indicators and consumer confidence provide ambiguous picture for immediate
outlook
Additional
indicators suggest that the economy is slowly improving, albeit along a
somewhat erratic path. The leading and coincident indicators for
April, published on 5 July, show an ambiguous picture for the immediate
future. The coincident indicator that tracks the current development
of the economy was up 0.38% over the preceding month, the second
consecutive increase. According to INEGI, the increase seized
virtually all components of the index. The leading indicator that
tries to anticipate the development of the economy in the months ahead,
declined 0.29% over the preceding month. However, the drop was
mainly the result of the anticipated rise of U.S. interest rates, which
prompted negative developments in the stock markets, the foreign exchange
market and interest rates. Those categories that are tied to the
domestic economy actually improved. On the other hand, consumer
confidence, which had improved markedly in May, dropped a notch in June,
as households assessed their future economic state more pessimistically
than in the previous month.
Outlook
remains cautiously optimistic owing to favourable global backdrop
Despite the
current ambiguous picture for the Mexican economy, Consensus Forecast
panellists are cautiously optimistic about growth prospects for this year.
In addition to the favourable global setting, the buoyant outlook for the
U.S. economy will provide an impetus for growth acceleration this year.
Panellists believe the economy will grow by 3.6% in May and 3.9% in June,
resulting in a second quarter expansion of close to 4%. Subsequently,
the economy should maintain the pace, expanding by 3.6% in the third
quarter and 3.7% in the final quarter. For the full year, Consensus
Forecast panellists expect the economy to expand by 3.7%, which is up 0.2
percentage points from last month’s forecast. The increased
competition from China in Mexico’s prime export markets and the
inability of the Fox administration to implement long-awaited economic
reforms are key obstacles to a more pronounced economic rebound. As
a result, the prospects for further acceleration in economic growth remain
moderate, as suggested by the 3.4% growth rate anticipated for 2005.
Buoyant
exports prompt first trade surplus in more than a year
In May, the
trade balance defied its natural red ink trend by exhibiting a surplus of
US$ 57 million. February 2003 was the last time the trade balance
registered a surplus. More important than the surplus was the rapid
export growth, which constituted a key driver of the Mexican economy.
In May, exports expanded at a double-digit pace (+21.1% year-on-year) for
the third consecutive month. Imports, which mainly serve as inputs
to the maquiladora export industry, grew 17.5% over May last year.
Exports profited from the high oil prices, which pushed oil exports by
40.8% over the same month last year to US$ 2.0 billion, the highest
monthly oil export level ever registered. However, non-oil exports
also increased a very robust 18.7% and exports from the all-important
maquiladora industry grew 21.8% over May 2003. |
