Mexico’s economy grows 0.9% in third quarter, exceeding forecasts

(Reuters) -Mexico’s economy expanded for the eighth consecutive quarter between July and September, driven by domestic consumption and industrial activity, a preliminary estimate from national statistics agency INEGI showed on Tuesday.

Latin America’s second-largest economy posted 0.9% gross domestic product (GDP) growth in the third quarter compared with the previous three-month period, and slightly above the 0.8% expected by economists polled by Reuters.

However, Jason Tuvey, deputy chief emerging markets economist at Capital Economics, said a “slowdown is on the cards” as monetary policy takes a heavier toll and weaker growth in the U.S. weighs on Mexico’s external sector.

The quarterly growth, INEGI said, was driven by a 3.2% jump in the primary sector and an increase of 1.4% in secondary activities.

Tuvey also added the breakdown of the data shows strong growth in the primary (agricultural) and secondary (industrial) sectors more than offset weaker growth in the tertiary (services) sector.

Carlos Morales, director of Latin America Sovereigns at Fitch Ratings says the results, “continue to signal the increasing demand for Mexican manufacturing production due to nearshoring effects”.

Last week, Deputy Finance Minister, Gabriel Yorio, said the Mexican economy would grow by at least 3.5% this year.

Compared with the same quarter a year earlier, the Mexican economy also grew 3.3%, the statistics agency added, also slightly above the projected 3.2% growth, continuing the streak of annual growth.

(Reporting by Ricardo Figueroa, Writing by Natalia Siniawski; Editing by Steven Grattan, Nick Zieminski and Jonathan Oatis)