No menu items!

COSTA RICA'S LEADING ENGLISH LANGUAGE NEWSPAPER

HomeTopicsBusinessMexico GDP growth beats forecasts as services sector lends boost

Mexico GDP growth beats forecasts as services sector lends boost

Mexico’s economy expanded more than forecast for the fourth consecutive quarter in the final three months of the year as domestic consumption rebounded amid record low inflation.

Gross domestic product rose 2.5 percent in the fourth quarter from a year earlier, according to preliminary figures released by the national statistics institute Friday. That compared with the 2.3 percent median forecast of 21 economists surveyed by Bloomberg. From the previous quarter, GDP advanced 0.6 percent, and increased 2.5 percent for the full year of 2015. The institute will release final GDP figures Feb. 23.

Mexicans have more money in their pockets after inflation slowed to record lows last year and the subsequent rise in purchasing power is supporting economic growth, Finance Minister Luis Videgaray said Wednesday. The country has been a bright spot for growth compared to some Latin American economies. GDP is forecast to expand 2.8 percent this year, according to analysts polled by Bloomberg, compared to the analysts’ regional estimate for a 0.5 percent contraction.

“Mexico performed better than anyone would have imagined given the steep decline in oil prices and spending cuts,” Alonso Cervera, chief Latin America economist at Credit Suisse Group, said in Mexico City before the report was released. “Services have been expanding nicely and more than compensate for the very sluggish performance in industrial GDP.”

The peso extended its advance after the GDP report, rising 0.7 percent to 18.2064 per U.S. dollar at 8:07 a.m. in Mexico City. The currency has slumped 6.1 percent this year through Thursday after the United States raised interest rates and plunging oil prices increased risks to government spending.

The pace of expansion weakened from 2.6 percent in the third quarter, the statistics institute said. The agency had originally reported third quarter growth of 2.3 percent as a preliminary figure, the first time it had released an initial number. Today was the second time.

While weak growth and low inflation point to leaving interest rates on hold, policy makers raised borrowing costs last month for the first time since 2008 and said they’ll focus on Mexico’s monetary posture relative to the U.S. Banco de Mexico Governor Agustín Carstens said last week it was “essential” that Mexico match the Federal Reserve’s monetary policy.

© 2016, Bloomberg News

Trending Now

Tourist Numbers Dropped in Costa Rica During 2025’s First Seven Months

Costa Rica's tourism took a hit in the first seven months of 2025, with visitor numbers dropping compared to the previous year. By the...

Expat Guide to Bilingual Schools in Guanacaste Costa Rica

When my wife and I moved to Costa Rica we were gloriously young and childless. Needless to say, childhood educational options were absent from...

Costa Rica’s Liberia Airport Fixes Runway Issues Overnight

Contractors began repairs on the runway at Daniel Oduber Quirós International Airport this week, focusing on sections that did not meet required standards after...

Costa Rica’s Rincón de la Vieja Volcano Experiences Moderate Eruption

Guanacaste residents woke up to activity from Rincón de la Vieja volcano yesterday morning. The volcano produced a moderate phreatic eruption at 6:08 a.m....

Melinda Hildebrand Confirmed as US Ambassador to Costa Rica

The United States Senate has approved Melinda "Mindy" Hildebrand as the new ambassador to our country, marking a fresh chapter in bilateral ties between...

Costa Rica President Narrows Legal Abortion to Life-Saving Cases

President Rodrigo Chaves has repealed Costa Rica's therapeutic abortion protocol, a move that fulfills a long-standing promise and tightens rules around the procedure. The...
spot_img
Costa Rica Coffee Maker Chorreador
Costa Rica Coffee Maker Chorreador
Costa Rica Travel Insurance
Costa Rica Rocking Chait
Costa Rica Travel

Latest News from Costa Rica