Economic activity has lost momentum since August 2021, still below pre-pandemic levels. Investment remains the long-term risk.
Consumption recovery is ongoing.
Mexican households are in a strong financial position.
Volatility in industrial production: strong growth in manufacturing and utilities, but weakness in construction and mining.
Foreign receipts support consumption and the peso.
Trade deficits in recent months reversed the surpluses of H2-2020.
Labour market is recovering, but under-employment remains.
Recovery is taking place in both formal and informal sectors, with an increase in self-employment.
Gender gap on the rise during pandemic.
Markets pricing a terminal rate above 7%, but neutral rate is close to 6% and analyst surveys expect just above 6%.
Highest headline inflation in 15 years, and second highest in the core component.
One of the strongest price shocks in the last decade.
Producer prices also feature an important shock, partially explained by public-policy effects.
Rising producer prices could partly explain important planned final price hikes over the coming months.
Appetite for investment in Mexican markets was still subdued in late-2021.
President AMLO’s administration needs more support for constitutional reforms. Key elections could realign legislature: Presidential mandate referendum and six state elections will take place in 2022.
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