economic activity came to a screeching halt in October

After several months of growth and even surprising the market, economic activity in Mexico stopped dead during October, according to data released by the National Institute of Statistics and Geography (Inegi).

In the tenth month of the year, the Global Indicator of Economic Activity (IGAE) –which monitors the behavior of the economy on a monthly basis– stood at a level of 113.2 points, with seasonally adjusted figures.

This is the same level that was reported last September, which is why the Mexican economy stagnated in October by not reporting any growth. In this way, it slowed down its dynamism after three consecutive months of growth.

“Month by month and with adjusted figures, economic activity stagnated after spinning three upward readings, staying just 0.1 and 0.4% below pre-Covid levels and its all-time high (September 2018), respectively,” said Alejandro Saldaña, Deputy Director of Economic Analysis at Ve por Más (Bx+).

The panorama would change little towards November. Marcos Daniel Arias, Monex analyst, recalled that the Timely Indicator of Economic Activity (IOAE) showed a monthly decrease of 0.1% for the penultimate month of the year.

“(Given the above) the last quarter of the year could be the weakest and open the door to scenarios of greater deterioration in 2023, a year for which the probability of a recession remains quite high,” he warned.

Towards the following year, the risks of a recession –especially in the United States– the persistence of high levels of inflation and the rise in interest rates at the international level will have their effect on the performance of the economy.

Although the performance of the economy in recent months has not been spectacular, the previous increases are enough to provide a robust picture for the whole year. As of October, the accumulated variation in all of 2022 amounts to 2.82%, so it is very likely that the total growth of the economy will be between 2.50 and 3.00% even if there is no progress during the two months that remain to be recorded ” Arias said.

fall in agriculture

Within the Inegi report, it was observed that the stagnation was explained, to a large extent, by the performance of primary activities, which includes the agricultural sector and which presented a considerable drop. In October, the monthly drop in the primary sector was 2.6%, after three months of growth.

Another activity that fell, but to a lesser extent, was the services sector, which is still trying to recover after being the most affected by the measures taken by the Covid-19 pandemic.

The tertiary sector showed a 0.1% monthly drop in October, the first contraction since last May, when it fell to the same magnitude.

“They saw a return to commerce, entertainment services, and accommodation and food preparation, which could indicate the dissipation of the reopening effect,” said Alejandro Saldaña.

Thus, only the industrial sector showed monthly growth in October. In the tenth month, secondary activities grew 0.4%, this after two consecutive months of falls.

ana.martinez@eleconomista.mx