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News Article

Mexico's GDP Grew by 1 Percent in 2Q22: SCHP

By Rodrigo Andrade | Mon, 08/01/2022 - 12:48

The Mexican Gross Domestic Product (GDP) grew by 1 percent during the second quarter of 2022 and maintained an expansion streak during the first three quarterly changes, informed the Ministry of Finance and Public Credit’s (SHCP) on its Economic Situation, Public Finances and Public Debt report. The country’s GDP grew by 2 percent during 1H22.

The International Monetary Fund (IMF) revised up Mexico’s economic forecast, which climbed to 2.4 percent from 2 percent. The IMF’s global forecast was revised down, from 3.6 percent to 3.2 percent for 2022. Globally, inflation will keep increasing and reach 8.3 percent, its highest since 1995 when it hit 12.6 percent, reported IMF. In Mexico, inflation grew by 0.51 percentage points during 2Q22, above the average of the previous quarter, reaching 7.7 percent.

Mexico’s internal activities registered quarterly growth during 2Q22, with primary activities growing by 0.9 percent, secondary activities by 0.9 percent and tertiary activities by 1 percent, with seasonally adjusted figures. The internal demand also faced an 0.8 percent monthly increase, reaching a 10-month growth streak.

The National Occupation and Employment Survey reported that during the second quarter of 2022, employment increased by 1.3 million over the previous quarter’s average. Formal employment increased by 172,000 jobs when compared to the end of the previous quarter, with seasonally adjusted figures. This means a 23-month streak of employment growth.

The Mexican peso fell by 1.3 percent against the US dollar, greatly due to the reference rate differential between the Bank of Mexico (Banxico) and the US Federal Reserve. Other countries from the region faced a greater devaluation, with Chile's currency falling by 16.8 percent, Argentina’s by 12.8 percent, Brazil’s by 10.9 percent and Colombia’s by 10.2 percent.

The public sector’s budgetary revenues added up to MX$3.3 trillion (US$162.7 million), meaning a 4.9 percent real increase from the first half of 2021. Oil revenue faced a 29.4 percent real increase from 1H21 because the average cost of the oil barrel grew from US$59.9 to US$97.4.

Tax collection revenue also grew steadily, showing a 2.7 percent real growth during the first six months of 2022 when compared to the same period in 2021, representing a total of MX$2.5 trillion (US$123.5 billion) accumulated earnings. Following this, collections from the Internal Revenue Service and the Value-Added Tax grew by 16.1 percent and 3.4 percent annually.   

In terms of expenses, total public sector expenditure stood at MX$3.5 trillion (US$173 billion), representing a 21 percent of real growth when compared to the first half of 2021. Social protection spending showed an annual growth of 7.5 percent, while economic development spending also grew by 3.8 percent in real terms compared to 1H21, making this the third consecutive year of cumulative growth.

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Rodrigo Andrade Rodrigo Andrade Junior Journalist & Industry Analyst