Bloomberg — Mexico’s economy stalled in May as tight monetary policy and cooling global demand took a toll on growth.
The economy shrank 0.03%, lagging forecasts of a 0.3% expansion of analysts surveyed by Bloomberg, and down from a 0.8% expansion the previous month.
Industry expanded 1%, while the services sector contracted 0.4% from the previous month, the national statistics institute reported Tuesday. Economic activity grew 4.3% from a year earlier.
The results point to an economy that is “losing momentum”, said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, in response to written questions.
“Increasing real interest rates, less-supportive external conditions, and a softening labor market, are now hurting, at the margin,” Abadia said. “The bad news for the Mexican economy is that domestic and external risks have increased recently, at least for now.”
The central bank halted its steepest-ever series of interest rates in May with the policy rate at 11.25%, as the growth outlooked dimmed and inflationary pressures ease.
--With assistance from Rafael Gayol.
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