Mexico's GDP grew 2.3pc in 2017

MEXICO CITY: Mexico's economy, Latin America's second largest, grew 2.3 percent in 2017 over the previous year, according to preliminary estimates released Tuesday by the government's statistics bureau.

The result matched the best-case expectation of Mexico's central bank, which had projected 2017 GDP growth as falling in a range between 1.8 and 2.3 percent.

A definitive report on 2017 GDP growth will be published February 23, the National Institute of Statistics and Geography said.

In the fourth quarter, Mexico's GDP grew by 1.0 percent, rebounding from an earthquake-affected third quarter contraction of 0.3 percent, the institute said.

The data confirm the resilience of the Mexican economy, which has continued to grow despite uncertainties over trade with the United States, the destination of 80 percent of its exports, and despite two destructive quakes that shook the country in September.

The central bank estimates that Mexico's economy will grow between two and three percent this year.

"It's a considerable recovery from what happened in the third quarter," said Banco Santander economist Rafael Camarena, calling the fourth quarter performance "good news."

He expects exports to be one of the main engines of Mexico's economic expansion over the next year, despite the dispute with Washington over the North American Free Trade Agreement.

Last year, Mexico had $409.5 billion in exports, with manufactured goods accounting for 90 percent.

NAFTA, which has served as a lynchpin of the economy since it was agreed in 1994, is currently being renegotiated with its US and Canadian partners.

The pact has been harshly criticized by US President Donald Trump, who has threatened to scrap it if US demands for changes are not met.

The latest round of negotiations closed on Monday in Montreal with little progress to show. The next round will be held in Mexico at the end of February.

Camarena was encouraged by signs of easing inflation, which he said will benefit consumers.

"That's why we think the domestic market will also see favorable performance," he said.

Mexico's annual inflation through December was 6.77 percent, its highest since May 2001, but analysts surveyed by the central bank expect it to go down in the coming months to close the year at 3.85 percent.