Mexican economy weakened considerably during Q2 - Wells Fargo

According to analysts from Wells Fargo, economic weakness in Mexico continued during the second quarter of 2016.

Key Quotes:

“According to preliminary results for Q2 GDP, the Mexican economy grew 2.4 percent on a year-earlier basis. Compared to the previous quarter, the economy dropped 0.3 percent, seasonally adjusted.”

“The service sector is still carrying the economy this year as the year-over-year rate posted a still strong 3.2 percent growth rate.”

“Of course, this is probably no surprise as the Mexican government has had to severely dial back on fiscal expenditures due to the collapse in the price of petroleum. At the same time, the decision of the Mexican central bank to increase interest rates since December 2015 is probably starting to have an impact on domestic consumption.”

“The weakness observed during the first two quarters of the year will probably remain in place during the second half of the year. We are still forecasting growth of 2.4 percent for the year as a whole for the Mexican economy. For this forecast to improve, we need a stronger U.S. economy and much higher oil prices, which, today, does not seem realistic.”