july september 2019...i. regional economic report ii. results july –september 2019 a. economic...

Regional Economic Report

July – September 2019

December 11, 2019

Outline

I. Regional Economic Report

II. Results July – September 2019

A. Economic activity

B. Inflation

C. Economic outlook

(based on data collected between September 23 and October 17, 2019)

III. Final remarks

2Regional Economic Report July - September 2019

Regional Economic Report

• The Regional Economic Report is a quarterly publication on the recent trends in economicactivity, inflation and business agents’ expectations in Mexico’s regions.1

• The information presented herein is taken into account by Banco de México’s Governing Boardwhen evaluating the economic situation and the forecast for the Mexican economy.

• The economic performance of the regions in Q3 2019 and business agents’ prospects for regionaleconomic activity and inflation over the following 12 months are analyzed herein.

3

1 For the purposes of this Report, Mexico’s states are grouped into the following four regions. Northern: Baja California, Chihuahua, Coahuila, Nuevo León, Sonora and Tamaulipas. North-Central: Aguascalientes, BajaCalifornia Sur, Colima, Durango, Jalisco, Michoacán, Nayarit, San Luis Potosí, Sinaloa and Zacatecas. Central: Ciudad de México, Estado de México, Guanajuato, Hidalgo, Morelos, Puebla, Querétaro and Tlaxcala.Southern: Campeche, Chiapas, Guerrero, Oaxaca, Quintana Roo, Tabasco, Veracruz and Yucatán.

Regional Economic Report July - September 2019

Outline



A. Economic Activity

B. Inflation

C. Economic outlook

(based on data collected between September 23 and October 17, 2019)

III. Final remarks


Regional Economic Activity

• During Q3 2019, Mexico’s GDP remained at levels similar to those of the previous quarter,after having exhibited slight consecutive falls from Q4 2018 to Q2 2019, according to mostrecent data.

This behavior reflected the loss of dynamism of aggregate demand, in a context in whichuncertainty associated to both external and domestic factors prevailed.

• The weakness of Mexico’s economic activity reflected the lack of dynamism exhibited by theCentral and Southern regions.


6

s. a. / Seasonally adjusted data.1/ The value of Gross Domestic Product (GDP) for Q3 2019 corresponds to observed data. Source: Estimated by Banco de México with seasonally adjusted series of domestic GDP and the Quarterly Indicator of Economic Activity by State. Instituto Nacional de Estadística y Geografía (INEGI, for its acronym in Spanish).

Economic activity in the Central region is estimated to have remained at levels similar to those in Q2. Althoughthe North-Central and Southern regions are foreseen to have grown, such an expansion would have occurredafter the falls observed in Q2, and, hence, economic activity in these regions would continue to be at levelssimilar to those observed in late 2018. In contrast, the Northern region is expected to continue following apositive trend.

Quarterly Indicator of Regional Economic Activity 1/

Index 2013=100, s. a.Total Non-oil

80

90

100

110

120

130

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Northern North-Central Central Southern GDP

Forecast

QIII80

90

100

110

120

130

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Northern North-Central Central Southern GDP

Forecast

QIII


7

• The use of luminosity images taken from space is increasingly common to estimate and/or analyzeeconomic activity across different regions of the world.

• This Box proposes the use of luminosity data as a measure of production inputs used in aneconomy.

Under this interpretation, the economic activity level generated by luminosity can be estimated(controlling for sectoral composition and population, as well) for all Mexican states. Said level can becompared to the GDP that the same luminosity level would generate in the U.S., which can be assumedas the country with the greatest productivity level by luminosity unit that can possibly be achieved.

• The results indicate that states in the Northern region are, on average, closer to the maximumproductivity level, followed by states in the central regions. In contrast, states in the south are thefarthest from the highest productivity level by luminosity unit.

Measure of Productivity by Unit of Luminosity in Mexican States


8

Satellite image of night lights 2015

a) Mexico b) United States

Source: Prepared by Banco de México with data from NASA/NOAA-VIIRS.



Regional Economic Report July - September 2019 9

Luminosity and Total Workers in Mexico

Note: Data for the physical capital stock correspond to 2013, while luminosity data correspond to 2015.*** p<0.01. The presented correlation coefficient corresponds to that of Spearman.Source: Estimated by Banco de México with data from INEGI, BEA, U.S. and NASA/NOAA-VIIRS. Data for2015.

Luminosity and Physical Capital Stock in Mexico

Note: Data for the physical capital stock correspond to 2013, while luminosity data correspond to 2015.*** p<0.01. The presented correlation coefficient corresponds to that of Spearman.Source: Estimated by Banco de México with data from INEGI, BEA, U.S. and NASA/NOAA-VIIRS.


12

13

14

15

16

14 15 16 17 18

Ln(w

ork

ers

)

Ln(lights)

Northern North-Central Central Southern

ρ= 0.8556***

12

13

14

15

16

17

14 15 16 17 18

Ln (

phys

ical

sto

ck)

Ln (lights)


ρ= 0.8798***

Regional Economic Report July - September 2019 10

Productivity Level Relative to that of the U.S., by Unit of Luminosity

Percentage points

Source: Prepared by Banco de México with data from INEGI, BEA, the U.S. and NASA/NOAA-VIIRS.

US production function:

Productivity by unit of luminosity relative to that of the U.S. for each Mexican state is given by:

𝑑𝑖 = 𝐺𝐷𝑃𝑖𝑀𝑋

𝐺𝐷𝑃𝑖𝑀𝑋𝑈𝑆

𝐺𝐷𝑃𝑖𝑈𝑆 = 𝐹𝑈𝑆(𝐿𝑢𝑚𝑖𝑛𝑜𝑠𝑖𝑡𝑦 𝑏𝑦 𝑠𝑒𝑐𝑡𝑜𝑟𝑖

𝑈𝑆 , 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑖𝑈𝑆)

Estimate of GDP that Mexico’s luminosity would generate if it had the US production function:

𝐺𝐷𝑃𝑖𝑀𝑋𝑈𝑆 = 𝐹𝑈𝑆(𝐿𝑢𝑚𝑖𝑛𝑜𝑠𝑖𝑡𝑦 𝑏𝑦 𝑠𝑒𝑐𝑡𝑜𝑟𝑖

𝑀𝑋 , 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑖𝑀𝑋)

Mexico’s production function:

𝐺𝐷𝑃𝑖𝑀𝑋 = 𝐹𝑀𝑋(𝐿𝑢𝑚𝑖𝑛𝑜𝑠𝑖𝑡𝑦 𝑏𝑦 𝑠𝑒𝑐𝑡𝑜𝑟𝑖

𝑀𝑋 , 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑖𝑀𝑋)


0

10

20

30

40

50

60

70

80

CO

AH

SON

CH

IH

GT

O

AG

S

TA

MP

S

BC

S

NL

ZAC

SLP

QR

O

VER

PU

E

JAL

HG

O

TLA

X

DU

R

OA

X

CH

IS

MO

R

BC

YU

C

CO

L

SIN

MIC

H

NA

Y

GR

O

ME

X

CD

MX

Q R

OO

Mex

ico

-U

.S.

rela

tive

pro

duct

ivit

y

Northern

North-Central

Central

Southern

11

s. a. / Seasonally adjusted data.Source: Estimated by Banco de México with seasonally adjusted series of the Monthly Indicator of Manufacturing Activity by State. INEGI.

In Q3 manufacturing activity is estimated to have continued expanding in the Northern region. In contrast, inthe Central and Southern regions, manufacturing activity is expected to have contracted at the margin.

Regional Manufacturing IndicatorIndex 2013=100, quarterly average, s. a.

75

85

95

105

115

125

135

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


Forecast

QIII


Regional Indicator of Mining, Quarrying, and Oil and Gas Extraction

12

s. a. / Seasonally adjusted data.Source: Estimated and seasonally adjusted by Banco de México with the series of the Monthly Indicator of Mining Activity by State and the Volume of Mining Production by Main States and Municipalities. INEGI.

In Q3 2019, mining seems to have halted the downward trajectory it has been showing since 2014, andhas even shown an incipient change of trend to the upside. Within mining activity, the item metal andnon-metal minerals continued exhibiting a weak performance in most regions.

Index 2013=100, quarterly average, s. a. Regional Contribution to Annual Growth of Mining, percentage points, s. a.

60

70

80

90

100

110

120

130

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


QIII

Forecast

-12

-10

-8

-6

-4

-2

0

2

4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Northern North-Central Central Southern National

QIII


13

During Q3 2019, the decreasing trend that construction has been registering since the beginning of 2018intensified.

Real Value of Production in the Construction Industry by RegionIndex 2013=100, quarterly average, s. a.

s. a. / Seasonally adjusted data.Source: Prepared and seasonally adjusted by Banco de México with data from the National Survey of Construction Companies. INEGI.

Total PublicPrivate

30

50

70

90

110

130

150

170

2009 2011 2013 2015 2017 2019

Northern North-Central

Central Southern

QIII30

50

70

90

110

130

150

170

2009 2011 2013 2015 2017 2019


Central Southern

QIII 30

50

70

90

110

130

150

170

190

2009 2011 2013 2015 2017 2019


Central Southern

QIII


14

Retail trade continued to expand in the Northern, North-Central and Southern regions, while in theCentral one it remained at levels similar to those of Q2 2019, after having contracted during the first halfof 2019.

Regional Trade IndicatorIndex 2013=100, quarterly average, s. a.

s. a. / Seasonally adjusted figures. Source: Prepared and seasonally adjusted by Banco de México with the series of Revenues from Retailers’ Supply of Goods and Services, by State. INEGI.

70

80

90

100

110

120

130

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


QIII


15

Tourism activity contracted in the Northern and Central regions in Q3 2019. The Southern region exhibited aslight increase in hotel occupancy and a drop in the inflow of passengers, while the North-Central regionexhibited an expansion in both indicators, albeit at a lower rate than that observed in Q2.

Hotel Occupancy Inflow of Passengers to Airports

Regional Indicators of Tourism (Traveler Accommodation and Air Transportation)Index 2013=100, quarterly average, s. a.

s. a. / Seasonally adjusted figures. Source: Prepared and seasonally adjusted by Banco de México with data from the Mexican Secretariat of Tourism and the state-owned Company Airport and Auxiliary Services (ASA; for its acronym in Spanish).

50

70

90

110

130

150

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


QIII 60

80

100

120

140

160

180

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


QIII


16

The agricultural and livestock product industry expanded in all Mexican regions, after having decreasedin Q2 2019.

Index of Regional Agricultural and Livestock Product ProductionIndex 2013=100, quarterly average, s. a.

s. a. / Seasonally adjusted data.Source: Estimated and seasonally adjusted by Banco de México based on data from the Agricultural and Fisheries information Service (SIAP, for its acronym in Spanish). Unlike GDP estimates, this indicator excludesinformation on the value generated by land cultivation and approximates a measurement of the gross production value, rather than a measurement of the added value generated in the sector.

60

70

80

90

100

110

120

130

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


QIII


17

Main Sources of Financing by Firms in Q3Percent of businesses that used each source of financing

Source: Banco de México.

Commercial banks Suppliers Own resources

The share of firms that resorted to financing their activities through commercial banks contracted in allregions, except for the Southern one. The share of firms that resorted to financing with own resourcesexpanded in all regions, except for the North-Central one, where it continued contracting.

0

20

40

60

80

100

2016 2017 2018 2019

Northern North-CentralCentral SouthernNational

QIII0

20

40

60

80

100

2016 2017 2018 2019


QIII 0

20

40

60

80

100

2016 2017 2018 2019


QIII


18

In Q3 2019, the growth rate of newly created IMSS-insured jobs continued to decelerate. In this respect,in all regions the quarterly rate of change is lower than that observed in early 2018, in particular in theNorthern Border Free Zone (NBFZ), where it even registered negative levels.

Number of IMSS-insured Workers, s. a. 1/

s. a. / Seasonally adjusted figures.1/ Permanent and temporary jobs in urban areas.Source: Estimated and seasonally adjusted by Banco de México with IMSS data.

Quarterly change, percent Index 2013=100

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2012 2013 2014 2015 2016 2017 2018 2019

NBFZ Northern excl NBFZ North-Central Central Southern

QIII90

100

110

120

130

2012 2013 2014 2015 2016 2017 2018 2019

Northern excl NBFZ North-Central Central Southern NBFZ

QIII


19

The Consumer Confidence Index remained at relatively high levels during Q3 2019 in all regions.

Consumer Confidence 1/

Balance of responses, s. a.

1/ This indicator’s values in Q4 2019 correspond to the average of October and November. s. a. / Seasonally adjusted figures.Source: Prepared and seasonally adjusted by Banco de México with data from the series of the Consumer Confidence Index (INEGI) and Banco de México.

25

30

35

40

45

50

55

2014 2015 2016 2017 2018 2019


Q IV


20

Average Subjective Probability of Impact on Production Caused by China-US Trade Conflict

Data in percent

Risk Perception of Firms’ Economic Activity in view of the China-US Trade Dispute

Manufacturing sector Other sectors

Note: The subjective probability of the impact by industry corresponds to the simple average of probability allocated to each scenario by business agents surveyed in each industry.Source: Program of Surveys among Business Agents, conducted by Banco de México.

2.8

14.7

72.2

9.3

1.00

20

40

60

80

Stronglynegative

Moderatelynegative

No impact Moderatelypositive

Stronglypositive

17.5 10.3

2.5

13.6

59.4

17.4

7.0

0

20

40

60

80

Stronglynegative

Moderatelynegative

No impact Moderatelypositive

Stronglypositive

16.2 24.4


21

Risk Perception of Firms’ Economic Activity in view of the China-US Trade Dispute

Average Subjective Probability of PositiveImpact on Production Caused by China-US

Trade Dispute Opinion of exporting firms

Data in percent

Firms that Reported a Positive Probability of a PositiveImpact on Production, by Region

Share of total firms surveyed in the regionData in percent

Source: Program of Surveys among Business Agents, realized by Banco de México.

40.9

13.1

0

10

20

30

40

50

Firms in sectors withhigher indirect

protection

Firms in sectors withlower indirect protection

40.2

26.5 25.6

11.5

26.0

0

10

20

30

40

50


Central Southern National


Outline




B. Inflation

C. Economic outlook

(based on data obtained between September 23 and October 17, 2019)

III. Final remarks


Annual Headline Inflation, by Region Figures in percent

Source: Prepared by Banco de México with data from INEGI and Banco de México.

Headline inflation has been decreasing in all regions considered in this Report.

23

1

2

3

4

5

6

7

8

2013 2014 2015 2016 2017 2018 2019


November

2019


24

Annual Core Inflation, by RegionFigures in percent

In all regions, annual core inflation continues to show persistence, although a certain decrease hasstarted to be observed in most regions since the end of Q3.


1

2

3

4

5

6

7

8

2013 2014 2015 2016 2017 2018 2019


November

2019


25


Annual Non-core Inflation, by RegionFigures in percent

During Q3 2019, the reduction annual non-core inflation has been exhibiting in all regions intensified.

-3

0

3

6

9

12

15

2013 2014 2015 2016 2017 2018 2019


November2019


26

Recent Dynamics of The Price Index of Tuition Fees of Private Universities

1/ Data as of November 2019.Source: Prepared with data from INEGI.

Average Inflation of Private University Price Index, at a Regional Level 1/

PercentThe following simultaneous equations model was estimated:

Prices Enrollment

ln 𝑃𝑖𝑡𝑂 = 𝛼𝑖 + 𝛼𝑡 + 𝛼 ln 𝑄𝑖𝑡

𝑂 + 𝑋𝑖𝑡𝑂𝜎 + 𝜖𝑖𝑡

𝑂 Supply

ln 𝑃𝑖𝑡𝐷 = 𝛽𝑖 + 𝛽𝑡 − 𝛽 ln 𝑄𝑖𝑡

𝐷 + 𝑋𝑖𝑡𝐷𝛿 + 𝜖𝑖𝑡

𝐷 Demand

ln 𝑃𝑖𝑡𝑂 = ln 𝑃𝑖𝑡

𝐷 Equilibrium condition

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

2012 2013 2014 2015 2016 2017 2018 2019



27

Recent Dynamics of The Price Index of Tuition Fees of Private Universities

Estimation of the Contribution of Supply and Demand Factors to the Evolution of Tuition Fees: Dec 2016 – Dec 2018Percentage points

Source: Prepared with data from the National Association of Higher Education Universities and Institutions (ANUIES, for its acronym in Spanish), Federal Electricity Commission (CFE, for its acronym in Spanish), National Population Council (CONAPO, for its acronym in Spanish), INEGI, Mexican Social Security Institute (IMSS, for its acronym in Spanish), Ministry of Public Education, and Ordorika y Rodriguez (2019).

Supply Demand

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0


Average electricity price Communications price indexPublic univer. enrollment rate Current federal budgetSupply fixed effect

4.84

7.37 7.35

6.74 6.65

Supply factors

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0


Demand fixed effect Applic. new admissions public univ.Skilled labor force ITAEEHigh school graduates

Demand factors:

3.33 3.20

3.67

2.683.19


Outline

28




B. Inflation

C. Economic outlook


III. Final remarks


29

Regional indexes signal that both manufacturing and non-manufacturing activity will expand in the next 3months. In the manufacturing sector, the signal of expansion strengthened in the Northern region andweakened in the rest of the regions. In the non-manufacturing sector, this signal strengthened in theNorth-Central and Southern regions and remained at the same level in the rest of regions.

Regional Index of Manufacturing and Non-manufacturing Orders: Activity Outlook, Next 3 Months

Diffusion indices, s. a.

Co

ntr

acti

on

Exp

ansi

on

Manufacturing Non-manufacturing

s. a. / Seasonally adjusted data.Source: Banco de México.

45

50

55

60

65

I 2017 II III IV I 2018 II III IV I 2019 II III


45

50

55

60

65

I 2017 II III IV I 2018 II III IV I 2019 II III



30

Business Agents’ Expectations: Demand over Next 12 Months 1/

Diffusion indices

For the next 12 months, business agents consulted in different Mexican regions anticipate a higherdemand for own goods and services. It is worth noting that in all regions, except for the Northern-Central one, the signal remained lower than that observed during the same period of the previous year.

1/ Results obtained from responses to the question: “With respect to the volume of sales of your goods and services in the previous 12 months, how do you expect your sales volumeto change in the next 12 months?”, from interviews conducted by Banco de México.

Co

ntr

acti

on

Exp

ansi

on

0

10

20

30

40

50

60

70

80

90

100

IV I 2017 II III IV I 2018 II III IV I 2019 II III



31

Consistent with the expected growth in demand for own goods and services, business agents anticipatean increase of hired personnel and physical capital in all regional economies, although in both cases thesignal remains lower than that observed in the same period of the previous year.

Business Agents’ Expectations: Hired Personnel and Physical Capital Stock, Next 12 Months 1/

Diffusion indices

Co

ntr

acti

on

Exp

ansi

on

Hired personnel Physical capital

1/ Results obtained from responses to questions: “With respect to the previous 12 months, how do you expect the total number of workers in your firm to change in the next 12 months?”, and “With respect to your firm’s investment infixed assets during the previous 12 months, how do you expect investment levels to change in the following 12 months?”, from interviews conducted by Banco de México.

0

10

20

30

40

50

60

70

80

90

100



0

10

20

30

40

50

60

70

80

90

100




32

Percentage Distribution of Business Agents’ Responses when Interviewed about the Main Three Factors that Could Hinder Growth of Economic Activity in their States in the Next 6 Months 1/

1/ Question: “Which do you consider to be the main three limiting factors for growth of economic activity in your state during the next six months?” This question is similar to that included in the questionnaire of the Survey among Private SectorSpecialists.Source: Banco de México.

0

20

40

60

80

100

Jan

.16

Jul.1

6Fe

b.1

7Ja

n.1

9M

ar.1

9Ju

n. 1

9Se

p. 1

9

Jan

.16

Jul.1

6Fe

b.1

7Ja

n.1

9M

ar.1

9Ju

n. 1

9Se

p. 1

9

Jan

.16

Jul.1

6Fe

b.1

7Ja

n.1

9M

ar.1

9Ju

n. 1

9Se

p. 1

9

Jan

.16

Jul.1

6Fe

b.1

7Ja

n.1

9M

ar.1

9Ju

n. 1

9Se

p. 1

9

Jan

.16

Jul.1

6Fe

b.1

7Ja

n.1

9M

ar.1

9Ju

n. 1

9Se

p. 1

9



33

Percentage of Firms that Reported having been a Target of Extortion 1/

• In the opinion of business agents interviewed by Banco deMéxico, public insecurity is one of the main factors limitinggrowth of regional economic activity.

• According to data collected among business agents interviewedby Banco de México, an upward trend in extortion reports hasbeen observed in the Northern, Central and Southern regionssince the beginning of 2018.

• In this context, the analysis in this box suggests that extortionmay be negatively affecting activity of non-manufacturingcompanies, particularly in the Southern region.

A logistic model with panel data was estimated to assess the effectof having been a victim of extortion on a variable that indicateswhether the company’s productive activity was growing or not.

In the case of the Southern region, the probability of a non-manufacturing company reporting an increase in activity goes from0.47 when it has not been a victim of extortion to 0.27 when it has.

Extortion and Business Activity in Mexico’s Regions

5.6

4.7

4.4

3.0 3.7

2.3 3

.7

6.4

0

5

10

15

20

25

II 2

015

I 20

16

II 2

016

I 20

17

II 2

017

I 20

18

II 2

018

I 20

19

5.7 7

.0

5.9

8.2

2.6

9.4

4.5

7.4

0

5

10

15

20

25

II 2

015

I 20

16

II 2

016

I 20

17

II 2

017

I 20

18

II 2

018

I 20

19

9.1

3.9

3.5

3.3

2.7

5.6 7

.1 7.7

0

5

10

15

20

25

II 2

015

I 20

16

II 2

016

I 20

17

II 2

017

I 20

18

II 2

018

I 20

19

8.6

6.6

5.8

8.4

2.9

7.1

13

.0

18

.7

0

5

10

15

20

25

II 2

015

I 20

16

II 2

016

I 20

17

II 2

017

I 20

18

II 2

018

I 20

19

1/ Percentage of responses to the question “During the reference semester, has the company been avictim of any of the following crime situations?” from interviews conducted by Banco de México.Source: Prepared with data from Banco de México.

a) Northern b) North-Central

c) Central d) Southern


Business Agents’ Opinion on Risks to Regional Economic Activity (based on data collected between September 23 and October 17, 2019) 1/

34

Upward risks Downward risks

That both public and private investmentis revamped.

That the U.S. – Mexico – Canadaagreement is ratified.

That public insecurity increases.

That the environment of domestic uncertaintythat has been affecting investment persists.

That the U.S. imposes tariffs on Mexican exportsor that ratification of the U.S – Mexico – Canadaagreement is extended.

1/ Results obtained from responses to the questions: “Which are the main two events/situations/facts that, if they occur, would boost economic performance in your state in the next 12 months?” and “Which are the main two events/situations/facts that, ifthey occur, would hinder economic growth in your state in the next 12 months?”, from interviews conducted by Banco de México between September 23 and October 17, 2019.


35

1/ Results obtained from responses to the question: “With respect to the previous 12 months, how do you expect sales prices in your sector to change over the next 12 months?”, from interviews conducted by Banco de México.

Business Agents’ Expectations: Annual Change of Sales Prices, Next 12 Months 1/

Percentage of responses

Regarding sales prices of own goods and services, most business agents interviewed in different regionsanticipate similar or lower annual changes as compared to those observed in the previous 12 months.

27

.4

27

.3

42

.5 47

.3

35

.9

39

.4

36

.6

51

.0

44

.1

38

.0 49

.6

48

.2

65

.8

52

.2

55

.3

47

.3

60

.8

57

.6

49

.1

51

.5

40

.9

42

.9 54

.4

48

.3

45

.4

59

.3

60

.9

46

.2 43

.6

52

.8

48

.1

48

.5

40

.2

48

.0

47

.0 31

.5 39

.3

26

.1

41

.6 42

.1

37

.5 20

.6

30

.2

40

.6

31

.1

44

.1

42

.9

35

.5

43

.4

43

.3

13

.3

11

.8

11

.3 9.1

11

.3

12

.5

14

.9 8.8 7.8

15

.0

18

.9 12

.5 8.1 6.2 2.6

15

.2

18

.6 12

.3

10

.4

17

.5

15

.0

14

.3

10

.1

8.4

11

.4

0

20

40

60

80

100

QIII18

QIV18

QI19

QII19

QIII19

QIII18

QIV18

QI19

QII19

QIII19

QIII18

QIV18

QI19

QII19

QIII19

QIII18

QIV18

QI19

QII19

QIII19

QIII18

QIV18

QI19

QII19

QIII19

Greaterchange

Similarchange

Lowerchange



36

1/ Results obtained from responses to the question: “With respect to the previous 12 months, how do you anticipate the change in input prices (goods and services) used in your sector to be for the next 12 months?”, and “With respect tothe previous 12 months, how do you anticipate the change in wages of workers in your sector to be in the next 12 months?”, from interviews conducted by Banco de México.

Input prices Wage costs

Business Agents’ Expectations: Annual Change of Input Prices and Wage Costs, Next 12 Months 1/

Percentage of responses

Most business agents interviewed in all regions expect input prices and wage costs to grow at similargrowth rates, as compared to those observed in the previous 12 months.

21

.2 31

.03

1.8

35

.82

8.0

19

.6 26

.7 35

.93

5.6

21

.8 31

.3 41

.43

3.3 41

.63

9.3

41

.4 54

.25

0.5

54

.24

2.7

28

.5 38

.03

7.9

41

.83

3.2

53

.15

5.8 61

.74

9.5

63

.6

56

.9 49

.55

1.5

53

.96

0.4

39

.33

6.0

50

.54

7.8

53

.0

42

.3 26

.03

4.6 4

0.2

50

.5

47

.7 42

.3 49

.5 47

.85

6.8

25

.7 13

.3 6.5

14

.7 8.4

23

.52

3.8 1

2.6

10

.61

7.8

29

.5 22

.5 16

.2 10

.6 7.7

16

.21

9.8 15

.0 5.6

6.8

23

.71

9.7 12

.61

0.4

10

.10

20

40

60

80

100

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

Greaterchange

Similarchange

Lowerchange


14

.21

2.4 2

5.2 3

6.4

26

.7

17

.72

0.6

24

.3 37

.92

0.0

19

.6 29

.53

1.5

34

.52

3.3

41

.12

0.2

43

.94

8.6

42

.7

23

.22

0.7 3

1.3 39

.22

8.1

73

.57

0.8

61

.75

9.1

68

.6

63

.7 65

.76

3.1

54

.47

2.0

61

.64

5.5

61

.3 61

.16

9.0 4

6.4

52

.14

3.9 40

.04

9.5

61

.35

8.7

57

.5 53

.86

4.9

12

.41

6.8

13

.1 4.6

4.8

18

.6 13

.71

2.6 7.8

8.0

18

.82

5.0

7.2 4.4

7.8

12

.52

7.7

12

.21

1.4

7.8

15

.52

0.7 1

1.2 7.0

7.1

0

20

40

60

80

100

QIII

18

QIV

18

QI 1

9Q

II 1

9Q

III 1

9

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19

QIII

18

QIV

18

QI 1

9Q

II 19

QIII

19



Outline

37




B. Inflation

C. Economic outlook


III. Final remarks


Final remarks

• In an environment of economic weakness and marked external and domestic uncertainty, theunfavorable performance that investment has been exhibiting for several years, and which intensifiedsince the beginning of 2018, stands out.

• Such performance has been reflected in lower growth of regional economic activity in the short term,and may lead to lesser growth of regions in the medium and long term.

• It is therefore necessary to foster the recovery of investment through a public policy agenda thatcontributes to generate an environment of certainty, strengthens the business climate, and continuesto reinforce the macroeconomic framework.

• Specifically, the structural and institutional setbacks that have prevented these economies fromattaining higher regional potential growth must be corrected. This would promote capitalaccumulation and productivity growth, particularly in the regions that lag behind the most or that aremore exposed to the prevailing adverse and complex international environment.


December 2019

july september 2019...i. regional economic report ii. results july –september 2019 a. economic...

Documents