Mexican industrial output unexpectedly stagnated in March compared with February, dampening growth hopes and putting pressure on the government's forecast for a third year running. Adjusted for seasonal swings, output was flat in March month-on-month, figures from the national statistics office showed on Tuesday. That fell short of expectations from a Reuters poll of economists for a 0.35 percent increase.
Compared with the same month a year earlier, industrial production in March increased by 1.7 percent, below the survey forecast for a rise of 1.85 percent. The disappointing figures, which were dragged down by weak performances by the mining sector and the oil industry, suggest the government will have to cut its 2015 growth forecast after first quarter gross domestic product (GDP) data next week.
Economists polled by the central bank in April forecast the economy would grow by almost 2.9 percent this year, a figure which would be an improvement on 2014, when Latin America's second-biggest economy expanded by just over 2 percent. Given weaker-than-expected industrial output, Goldman Sachs said in a note it had cut its 2015 Mexican GDP growth forecast to 2.8 percent from 2.9 percent. The government has predicted growth of between 3.2 percent and 4.2 percent, and Finance Minister Luis Videgaray has said he will decide whether an adjustment is needed once first quarter GDP figures have been released on May 21.
Hopes for stronger growth were high when President Enrique Pena Nieto took office in December 2012 promising to reform the economy, which has underperformed its Latin American peers. Pena Nieto pledged to ramp up annual growth to five percent or more, but instead it has slowed significantly. Videgaray had to slash the growth forecast last year and in 2013. A sharp decline in global crude prices has hurt Mexico's economy, and dealt a blow to Pena Nieto's flagship economic reform, the opening up of the oil and gas industry.
The government depends on revenues from state oil and gas giant Pemex for about one third of the federal budget. But Pemex output has hit multi-year lows and the company posted a loss of more than $6 billion in the first quarter. Growth in industrial output in February was revised up by one-tenth of a percentage point to 0.3 percent month-on-month, the data showed. That was preceded by month-on-month contractions in January 2015 and December 2014.