The Day at a Glance | March 25 2022

The Top

*Mexico`s economy increased 0.4% monthly in January and 1.8% annual, according to the Global Indicator of Economic Activity.

*The United States and Europe reached an agreement to substitute part of Russia`s natural gas supply in the European market.

*U.S. Secretary of the Treasury Janet Yellen expects a strong economy despite increasing prices and a global slowdown due to the conflict in Ukraine.

*Deputy Finance Minister Gabriel Yorio pointed out that growth and inflationary forecasts in the 2022 budget will be revised.

*The United Kingdom and Canada will start formal negotiations of a free trade agreement.

Economic environment

Mexico`s economy logged growth in January. According to the INEGI`s most recently published figures, Mexico`s economy grew a monthly 0.4% in January and recorded a 1.8% annual rate of expansion. The data confirms an acceleration in economic activity at the start of the year – despite Omicron`s impact. The industrial sector led the way with a 1% monthly rate of growth (4.3% annual); while services barely increased with respect to December (0.2% monthly; 0.8% annual) and primary activities receded during the month (-2.3% monthly; 1.8% annual). Even though there was a slow rate of growth and an adverse impact on the services sector in January, month to month figures show that there is improvement regarding the overall economy and point out the possible end of the standstill seen at the end of 2021. The data could improve even more in February, given the fact that the U.S. industrial sector has showed greater performance and could back growth in Mexico`s industrial sector in what`s left of the 1Q22; while there could be a recovery in the services sector in February after the most recent virus`s wave. At the moment, the data is in line with Mexico`s growth estimates, which are currently set at 2.2%-2% for 2022. However, risks are skewed downwards, and there is a possibility that growth could become slower in an environment characterized by high inflation, increasing interest rates, and a complicated global outlook (persistent production chain issues and volatility in financial markets).