The Day at a Glance | January 31 2023

The Top

*Mexico´s economy logged a 3.5% annual rate of growth in the 4Q22, slightly higher than what estimates forecasted.

*The Ministry of Finance and Public Credit made its 2022 fiscal balance known, which shows that public debt set at 49.4%.

*The International Monetary Fund revised its 2023 growth estimates upwards.

*The Eurozone logged a 0.1% quarterly rate of growth at the end of 2022, above the estimated -0.1% due to unexpected growth in France and Ireland. With this, GDP in the 4Q22 increased 1.9%. 

*PMI´s in China surprised to the upside after three consecutive months of setting in contractionary territory. The manufacturing index set at 50.1 points while the non-manufacturing index rebounded to 54.4. With this, the composite index reached a 7-month high (52.9). The rebound is attributed to the elimination of disruptions as anti-Covid measures were eased in December. 

*The Federal Reserve of Dallas´s manufacturing activity index logged a -8.4 figure in January, which reflects a lighter contraction than what was expected by the consensus (-15.0), and an improvement with respect to the previous figure (-18.8). Despite the “positive surprise”, concerns of a recession remain in place.

*President Biden is planning for Covid-19 to stop being classified as a national public health emergency on May 11th. The main implication of this entails that tests and treatments would have to be paid by citizens. 

Economic environment

Mexico´s timely Growth Domestic Product (GDP) estimate logged a 0.4% quarterly rate of growth in the 4Q22. Even though this growth set above the 0.3% expected by analysts, it shows a slowdown with respect to the previously logged 0.9%. Primary activities increased 2% – the same as the previous quarter´s figure; secondary activities hiked 0.4% (-0.2pp), while tertiary activities logged a greater slowdown (0.2% vs 1.1% prev.). At an annual rate, Mexico´s economy logged a 3.5% rate of growth, which, similar to the quarterly figure, slightly exceeded the consensus´ estimate (3.4%), although it set below the previous 4.3% figure. With this, GDP growth averaged 3.0% in 2022. In this sense, the International Monetary Fund revised its global growth estimates upwards. The international agency now forecasts a 2.9% rate of growth for the global economy – 0.2pp greater than the estimates it had made known in October. This adjustment is supported by a resilient North American economy, lower energy costs in Europe and a rebound in activity in China after it abandoned its zero-Covid policy. Because of this, US growth is expected to set at 1.4% (+0.4pp); the Eurozone´s at 0.7% (+0.2pp); China´s at 5.2% (+0.8pp) and Mexico´s at 1.7% (0.5pp). Additionally, the Ministry of Finance and Public Credit revealed the 4Q22 public finance figures. What stands out in the report is a lower ratio of public debt to last year´s budget in 1.6pp, and in 1.4pp with respect to the end of 2021. The government also underlined higher budgetary revenues even despite carrying out gasoline subsidies – this was no small feat as said subsidies cost 397,000 million pesos. Public revenues increased 2.5% due to greater oil-revenues in light of higher prices of oil as well as greater collection of income tax (ISR), which reached an all-time high. Spending increased 4.1%, which led the primary balance to log a deficit of 0.5%.

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