Mexico's economy bounced back more than expected in the fourth quarter, according to preliminary data, but signs of slowing growth could feed discontent ahead of the presidential election in July. Gross domestic product in Latin America's second-biggest economy grew around 1.0 percent in seasonally adjusted terms in the October-December period, compared with the previous quarter, the national statistics agency said on Tuesday.
A Reuters poll had forecast an expansion of 0.6 percent. The economy rebounded after shrinking 0.3 percent in the third quarter as the country recovered from two devastating earthquakes that dented activity in the July-September period. Higher interest rates and persistent inflation could weigh on consumer demand that helped support the Mexican economy last year amid uncertainty around US President Donald Trump's threats to pull out of a free-trade deal with Mexico.
It is still unclear if Mexico, Canada and the United States will be able to renegotiate the North American Free Trade Agreement (NAFTA), adding to concerns about the outcome of Mexico's presidential race, which a leftist candidate leads in the polls. "Important investment decisions may potentially be postponed, scaled down or even canceled," Goldman Sachs economist Alberto Ramos wrote in a note to clients.