Mexico's economy has continued its upward trajectory with a 0.9% expansion in Q3 2023, marking the fastest pace since Q3 2022 and the eighth consecutive quarter of growth, as reported by the National Statistics Institute. The sectors contributing to this growth include industrial production, services, and agriculture, which increased by 1.4%, 0.6%, and 3.2% respectively.
The major factors driving this growth have been identified as strong US demand for Mexican goods, record remittances, wage gains, and a rise in consumer spending. Analysts at Fitch Ratings highlighted the significant growth in private investment within the machinery and equipment and non-residential construction sectors. He attributes this surge to near-shoring effects.
Looking ahead to 2024, potential economic challenges are on the horizon. Jason Tuvey from Capital Economics has warned of possible headwinds due to high interest rates imposed by the Bank of Mexico and a potential slowdown in the US economy.
Despite these potential obstacles, Tuvey also suggested that an expected increase in government spending leading up to the 2024 elections could provide a counterbalance to these challenges. This anticipated boost in government expenditure could serve as a buffer to maintain Mexico's current economic momentum.
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