Mexico economy posts fastest quarterly growth in two years

MEXICO CITY (Reuters) - Mexico’s economy posted its fastest growth in more than two years on Wednesday, and the government stuck to its outlook, insisting there was no tangible threat yet from U.S. President-elect Donald Trump, who has threatened to tear up a free trade deal.

A farmworker picks strawberries at a farm in the town of San Quintin, Baja California March 25, 2015. REUTERS/Rafael Blancas

Gross domestic product grew by 1.0 percent in the third quarter compared with the prior quarter MXGDPQ=ECI, according to seasonally adjusted data from Mexico's statistics agency, in line with estimates in a Reuters poll.

It was the fastest quarterly expansion since the second quarter of 2014.

Deputy Finance Minister Vanessa Rubio said the government still expected the economy to grow between 2.0 and 2.6 percent in 2016, pointing to “solid” consumption despite weak factory production and lower oil output.

Mexico also held to its 2017 GDP forecasts, Rubio said, even after private sector economists cut their outlook for next year on expectations that U.S. President-elect Trump could enact policies that hurt Mexican exports. The United States is Mexico’s top trade partner.

“Not one policy has materialized and now what we have are expectations. They are suppositions and we have to work with concrete issues, with enacted policies,” Rubio said.

Trump threatened during his campaign to tear up a free trade deal with Mexico. The median of a poll from bank Banamex on Tuesday showed economists revised down their outlook for 2017 to 1.8 percent from 2.3 percent.

The poll projected 2.1 percent growth this year.

The GDP data showed the industrial sector grew 0.1 percent in the April-June period. Weak demand in the United States for Mexican-made goods has weighed on Latin America’s second biggest economy.

Mexico’s agricultural sector grew 2.0 percent, the data showed, while services advanced 1.4 percent, the fastest quarterly expansion since the third quarter of 2011.

Upwardly revised quarter-on-quarter data showed the economy grew a slight 0.1 percent in the second quarter compared with a previously reported contraction.

In annual terms, the economy grew 2.0 percent compared with the same period last year MXGDPY=ECI, in line with forecasts.

Reporting by Michael O’Boyle; Editing by Chizu Nomiyama, W Simon and JS Benkoe