Mexican economy slows in Q4 as growth reaches 3% in 2022

Mexico's economic growth slowed in the fourth quarter of 2022, affected by the weak economic performance of the US, its main trading partner.

Mexican GDP grew 0.4 quarter-on-quarter in 4Q22, down from the sequential growth of 0.9% seen in July-September and the lowest quarterly figure for the year, according to preliminary seasonally-adjusted figures from statistics institute Inegi, published on Tuesday.

However, in year-on-year terms, growth reached 3.5% in the fourth quarter, albeit lower than the 4.3% expansion seen in 3Q22.

For the whole of 2022, Latin America's second largest economy grew 3.0% after expanding 5.0% in 2021, which was partly supported by the lower base of comparison in the pandemic-hit 2020 figures. Nevertheless, the growth seen last year "implies a full recovery from the COVID-19 crisis," economist Gabriela Siller said on Twitter.

“2022 was a good year in terms of growth, but it could have been better if the nearshoring opportunity had been fully exploited and if the internal growth driver of gross fixed investment had been in place. With this, GDP could have grown 4%”, added the director of economic analysis at Banco Base.

On Monday, deputy finance minister Gabriel Yorio said in a press videoconference that the economy was estimated to have grown between 2.9% and 3.0% last year, driven by the labor market and private consumption.

"Practically, this growth has been driven by increases in almost all sectors, as well as high levels of employment and private consumption," the official told reporters.

In its quarterly World Economic Outlook report published on Monday, the IMF made an upward revision to its GDP growth estimate for Mexico to 1.7% from the previous 1.2%, due to “due to unexpected domestic demand resilience, higher-than-expected growth in major trading partner economies." 

However, it also cut its forecast for Mexico in 2024 to 1.6% growth, down from the 1.8% it had estimated in October.