Good and bad news for the economy of Mexico in the AMLO government

This Friday the Inegi offered the Mexicans two facts about how the economy is doing in the country. 

The deputy governor of the Bank of Mexico, economist Jonathan Heath, summed up these two indicators in a tweet: on the one hand the good news is that household consumption advanced 0.7 %, but the bad news is that gross fixed investment fell -0.8 %. 

The productive investment in Mexico registered a contraction of 7.4% at an annual rate during June, which represented the biggest drop for this indicator since November 2010, the National Institute of Statistics and Geography (Inegi) reported on Friday.

For Juan Manuel Chaparro Romero, president of the Canacintra industrial development, the stagnation presented by the Mexican economy is due, in large part, to the notorious absence of new and greater public investments, coupled with suspensions or cancellations of magnificent works by the Federal government and a high incidence of acts of insecurity.

The negative data of the Gross Fixed Investment (IFB) was derived from a contraction in the two main areas of our country’s productive expenditure, construction and machinery, and equipment.

On the one hand, construction reported an annual decline of 4.5%, which represented the fifth consecutive fall for this component.

Within the sector, it was observed that residential construction decreased by 4.84% at an annual rate, while non-residential construction (oil and telecommunications works) decreased by 3.18%.

In turn, spending on machinery and equipment accumulated its eighth consecutive low, reflecting an annual contraction of 11%, its biggest decline since 2010.

In a disaggregated manner, investments in machinery and equipment of national origin fell 4%, while those imported decreased 16.8%.

THE GOOD NEWS: CONSUMPTION

In turn, the consumption of Mexican households reported a rebound of 1.31% at an annual rate during June, mainly driven by the 1.6% growth that showed the consumption of goods and services of national origin.

The Monthly Indicator of Private Consumption in the Internal Market increased 0.7% during June 2019 compared to the previous month, with seasonally adjusted figures, the Inegi reported. 

During the January-June period of this year, consumption increased by 0.9%.

This indicator measures the behavior of expenditure made by households in consumer goods and services, both national and imported origin, thereby allowing monthly monitoring of the most significant component of GDP on the demand side.

Source: nacion321

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