Mexico's economy may have avoided the bulk of Donald Trump's tariffs on the rest of the world, but uncertainty continues to weigh on its economy.
In the third quarter, Mexican GDP contracted by 0.3% compared to the previous quarter and by 0.2% year-on-year.
Good service's performance compensates the industry
The poor form of industry (-2.7% over one year) has a lot to do with it. The mining sector contracted by 5.0%, construction by 4.7%, and manufacturing by 1.9%. Uncertainty around global trade, particularly trade relations with the United States, weighed on the country.
But at the same time, the services sector remains in the green (+1%), driven in particular by retail sales, up 4.4%.
At 3.6% in October, inflation remains below the monetary authorities' targets (3% inflation with a tolerance of +/-1%).
Banxico, Mexico’s central bank, therefore has the necessary room for manoeuvre to lower its key rates, making credit cheaper and stimulating domestic demand. On the other hand, it can do little against the vagaries of relations with the White House and Trump's moods.
For investors, it is good enough
Investors are satisfied with this dynamism in the tertiary sector and this promising domestic market.
Since the beginning of the year, the Mexican stock market has performed well, with a gain of 25% (in €, prices and dividends).
This market is worth a look. We invest in them as part of our neutral and dynamic portfolios.