- INEGI released the preliminary GDP figures for 3Q24 today (30/10). Economic activity during this period expanded 1.0% QoQ, implying a growth of 1.5% YoY compared to the same year-ago period. Additionally, year-to-date growth stands at 1.4%.
- The recovery was driven by all three sectors: agriculture, industrial production and services. In 3Q24, and compared with the previous quarter, agricultural activities grew by 4.6% (3.8% YoY), up from -0.24%; industrial production rose from 0.6% (0.39% YoY) to 0.9% (0.5% YoY), and services grew from 0.1% (1.5% YoY) to 0.9% (1.9% YoY).
- Looking ahead, we anticipate that the Mexican economy will slow down, with growth of between 1.1% and 1.3% YoY in 2024. We stand pat on our view that the economy will grow below its potential level in 2025. Additionally, the balance of risks for growth is skewed to the downside, in our view.
- In this context, we see value in the 3-5Y section of the nominal sovereign curve, with a good chance of steepening, particularly of the 2-10Y slope, as we believe that Banco de México will continue to cut the policy rate in its upcoming meetings.
- We anticipate considerable volatility in the USDMXN as we near US election day. Although we expect the currency pair to wobble around the 20.0 mark, we see the support level at around 19.60 and resistance at 20.50.