Mexico's Economy Grows 3.3% in Q3 2023, Driven by Industrial and Agricultural Activity

Mexico's economy grew 3.3 percent in the third quarter of 2023 year on year, driven mainly by industrial and agricultural activity. The agricultural sector grew by 5.7 percent between July and September, while industrial activity expanded by 4.3 percent. The services sector, which contributed the most to the country's gross domestic product (GDP), expanded 2.7 percent in the third quarter. Mexico's GDP accumulated a year-on-year expansion of 3.4 percent in the first nine months of 2023. This growth has surpassed expectations and is attributed to surging exports to the US and strong consumer spending. The country has benefited from the strength of the US market and nearshoring, with consumer demand and a robust labor market supporting growth. President Andres Manuel Lopez Obrador is rushing to complete infrastructure projects before his term ends next year. However, high borrowing costs and reduced government spending are expected to impact future growth. Moody's has raised its growth forecasts for Mexico's economy, citing positive surprises in productive sectors and nearshoring trends. The agency now expects Mexico's GDP to grow 3.5% this year and 2.3% in 2024. Mexico's government also forecasts GDP growth of at least 3.5% this year and next. Citibanamex Financial Group forecasts economic expansion of 3.3 percent for all of 2023, and 2 percent in 2024. In line with this positive outlook, a Reuters poll predicts that Mexican stocks will continue to gain in 2024 due to faster economic growth, with a projected 11% increase by the end of the year. The spillover of manufacturing plants relocating to Mexico for proximity to the United States is expected to support Mexico's equities. However, there may be some volatility leading up to the presidential election in June. The head of equity strategy at Masari Casa de Bolsa, Adrian Ramirez, believes that stocks may experience volatility due to political developments in Mexico and the United States, as well as policy adjustments in both countries. The campaign for the presidential vote on June 2 is starting to take shape, with ruling party candidate Claudia Sheinbaum pledging to continue the legacy of President Andres Manuel Lopez Obrador. In addition to Mexico, the Brazilian stock market is also expected to see growth in 2024, with a projected 10.6% increase by the end of next year. However, foreign investors may have less incentive to buy Brazilian stocks due to high interest rates abroad. The article also mentions the recovery of the Brazilian stock market in November after a spike in U.S. Treasury yields and stable trends in debt markets.

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Sources:
- Xinhua: [a0dfc5e5]
- Reuters: [631c097a]
- Bloomberg: [3496e81e]
- Nasdaq: [388f2ff9]
- Business Standard: [f3c8c558]