Mexico’s economy is rebounding faster than expected, largely due to the expanding tertiary activities and the economic reopening in neighboring United States.
The International Monetary Fund (IMF) has estimated that Mexico’s GDP will grow more than 6% this year.
Economic activity expanded 25.1% in May versus a year earlier, according to the data released by the country’s National Institute of Statistics and Geography (INEGI).
Lifting of Covid-related restrictions, positive spillovers from US growth, and stronger terms of trade, should all help to speed growth in the days to come, say analysts.
Analysts say the stronger US economy is stoking demand for Mexican exports. And Mexican Americans have also resumed sending money (remittance) to their families back home.
Latin America’s second-largest economy suffered a devastating blow from the pandemic, contracting 8.5% in 2020, its worst performance since the Great Depression.
“Now, what we are seeing is domestic demand come back up, a demand for services, it has gone up. Because of that, we are seeing stronger recoveries than we expected,” stated IMF’s chief economic advisor Gita Gopinath.
“Mexico is also indirectly benefiting from additional US stimulus packages that have somehow increased and strengthened demand,” she added.
“Vaccination rates are picking up and that will help with the pandemic over the next several months. That’s basically a reflection of the fact, to an important extent, a reflection of the fact that we are upgrading our GDP numbers for Mexico.”