The Day at a Glance | April 25 2022

The Top

*Mexico`s economy was stagnant in February, according to the IGAE.

*Overly aggressive interest rate increases (75bp) is not the right way to deal with high inflation: Loretta Mester, Cleveland FED.

*Emmanuel Macron wins second term as French President.

*Growing COVID-19 cases in Pekin increase fears of confinement measures in China`s capital.

*Mexico and Brazil show evidence of stagflation: IIF.

*Confidence in Germany`s economy improves despite the war in Ukraine (Ifo 86.7 Apr vs 83.5e.).

Economic environment

Mexico`s economy didn’t record growth. According to the INEGI`s Global Indicator of Economic Activity, Mexico`s economy didn’t log any growth during February (0% monthly); even though it recorded 2.7% growth at an annual rate. The figures set slightly below estimates, which forecasted a 0.2% monthly rate of growth – and 2.8% annual. Tertiary activities (services and trade) were the only ones that logged growth during the month, with a 0.5% increase during the period (2.8% annual); but the industrial sector (-1% monthly; 2.5% annual) and primary activities (-3.8% monthly; -2.4% annual) logged contractions. The data confirms that Mexico`s economy logged a slow pace of growth, even though leading indicators suggest that conditions were more favorable at the end of the 1Q22. On Friday, GDP growth estimates for the first quarter will be made known; it`s expected to log a 1.3% annual rate of expansion during the quarter. Even though the industrial sector logged a faster than expected recovery, Mexico`s economy still faces important challenges to record faster rates of growth, mainly because of high inflation and a restrictive monetary policy on behalf of the central bank.