- Mexico’s economy decelerated in 4Q23, with the GDP inching up a mere 0.1% QoQ (2.4% YoY) as the slowdown was all across the board.
- With the complete data for 2023, the Mexican economy should have expanded by 3.1% with growth of 3.6%, 2.9% and 2.2% in industrial production, services and primary activities, respectively.
- The year-end deceleration was significant and contrasts with a strong year-end in the US (0.4% QoQ SAAR in Mexico vs. 3.3% in the US), which reflects an unusual decoupling from the US economy.
- However, we maintain a positive outlook for the Mexican economy in 2024 (see our “Macro Strategy: trading the Mexico 2024 outlook,” dated January 9, 2024).
- Banco de México will start an easing cycle in 1Q24, in our view, but the Board will pause in February’s meeting as it did not change its forward guidance in the previous meeting. We see value in the 7-10 year MBonos and long-end Udibonos from a directional perspective, and there is tactical value in the short end of the nominal curve.