The Day at a Glance | October 6 2020

The Top

· Investment and consumption grew in Mexico during July.

· IMF will slightly adjust its growth estimates upwards in its next economic expectations report: Georgieva.

· Automobile production and exports in Mexico continued in contraction during September.

· Christine Lagarde and Jerome Powell will give public speeches throughout the day.

· Economic indicators: Export and import figures from China will be published, they are expected to continue to show improvement.

Economic environment

INEGI published positive figures for consumption and investment in Mexico during July. Investment increased 4.4% month over month, even though it remained at (-) 21.2% annual; this is the second consecutive month of recovery since February. Figures exceeded estimates and what stands out is the improvement seen in investment machinery and domestic equipment (21.8% monthly). As for consumption, it grew 5.2% month over month and July closed with a (-) 15.3% annual contraction. This was also the second month of improvements for the domestic market as growth was seen in the demand for local goods (8.2% monthly) as well as imported goods (6.4%). Trade balance figures (imports) suggest that the recovery`s trend in both line items were maintained up to September, even though there has been a slight moderation in the most recent months.

AMIA figures confirmed a setback regarding the recovery of automobile exports in Mexico. According to figures published by the Mexican Association of Automotive Industry (AMIA by its initials in Spanish), the exportation of light automobiles contracted (-) 13.6% annually, the greatest contraction since July. The report mentions low foreign demand and changes in Ford`s production lines as the main reasons for this setback. The changes that Ford carried out reduced the company`s contribution to production and exports. Regarding production, it continues to recover, although it remained in contraction (-5.5% annual) during September. Total sales and the domestic market also continued to recover, even though they are still far from reaching levels seen last year (-22.79% annual).

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