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Economy Grows at the Beginning of the Year, Although with Divergences

26 March 2019

According to INEGI data, construction grew 2.9% in January compared to December 2018, making it the economic sector with the highest growth at the beginning of the year.

This is reflected in the almost 60 thousand jobs created by construction in the first two months of the year, only behind the 107 thousand created in manufacturing.

However, much of the growth is explained by a rebound effect, after a strong contraction of this economic sector in 2018. Although employment and construction activity are increasing, it lacks ground to reach previous levels.

Nearby are professional and corporate services, which grew 2.3% monthly, or 6.7% annually. This sector is the fastest growing in the economy.

However, the accommodation and restaurant services sector fell 0.9% in January, representing a 2.9% year-on-year drop. Together with recreational services they represent the most lagging sectors of the economy (excluding mining).

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This gives a monthly growth of the economy by 0.2% in January, or what is 1.2% per year, which although it seems that the gasoline shortage problems did not impact much on production, it does notice a considerable slowdown.

So far, the growth of the economy is supported by manufacturing activity, linked to exports, although with lower growth due to the slowdown in the United States and due to a certain resilience of consumption, which benefits from wage increases, transfers and remittances.

How far can the economy go, in an environment of relatively high risk aversion?

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