Mexican economy grows 3.8% in first quarter

Mexico's economy, the second-largest in Latin America after Brazil, grew by 3.8 per cent in the first quarter of 2023 from the year-earlier period, preliminary official figures showed Friday.

Compared with the previous quarter, gross domestic product (GDP) increased by 1.1 per cent, lifted by growth in services and exports, the national statistics agency INEGI reported.

Gabriela Siller, head of economic analysis for the financial group BASE, sounded a note of caution despite the solid performance so far this year.

"Risks to growth persist due to the increased probability of recession in the United States, which could affect Mexico's growth through remittances and exports," she said in a note to clients.

The Mexican economy grew by 3.1 per cent in 2022 and 5.0 per cent in 2021, bouncing back from the worst slump in decades due to the coronavirus pandemic.

The central bank, which has raised its benchmark interest rate to a record high of 11.25 per cent to tackle inflation, has forecast GDP growth of 1.6 per cent for 2023.

Mexico hopes to benefit from the so-called "nearshoring" trend of US companies like electric carmaker Tesla moving their production closer to home instead of to Asia.