Financial Estimates Remain ConservativeBy Sofía Hanna | Tue, 07/20/2021 - 18:29
INEGI’s “The Timely Indicator of Economic Activity (IGAE)” published in June shows a considerable improvement in the performance of the industry but a decline in services. Given these results obtained, experts at Banorte forecast a further increase in economic activity but the panorama remains complex given the pandemic.
Banorte’s analysis of INEGI’s figures highlights the reappearance of COVID-19 cases, a slowdown in the daily rate of vaccination and the persistence of problems in supply chains. These factors are expected to affect economic recovery. “The estimates imply a 20.2 percent YoY advance for the IGAE during 2Q2021, slightly less than our current GDP estimate of 20.3 percent, suggesting greater challenges at the end of the period and early third quarter.”
Another Banorte report indicates that industrial production advanced but remains in a difficult position, with supply problems persistently impacting production in the manufacturing sector despite the high demand. The barriers to an efficient industrial production remain the main obstacle to a full recovery. We maintain our forecast of a 32.2 percent YoY expansion in the industry during 2Q2021 with balanced risks, part of our recent revision of the annual GDP now at 6.2 percent (previously: 5.9 percent), as commented in the report of “Slight advance in May due to persistent challenges in manufacturing.”
Following the “modest” advance seen in June, Banorte estimates a growth of 14.7 percent year-over-year (between 13.4 percent and 16.1 percent), which would result in a 0.3 percent growth month-over-month. “Specifically, we think that part of the moderation could be associated with a more complicated base effect. In addition, we believe that problems in the supply chains continued to affect the industry,” explained Banorte.
Both forecasts agree that while economic sectors accelerated in May, industrial production slowed down the following month. The uncertain scenario caused by the spread of the COVID-19 delta variant, the rise in infections and the continued disruptions of supply chains may still alter future forecasts for 2021.