The monthly activity index barely rose by +0.1% m/m after a -0.5% drop in March in seasonally adjusted terms, helped by the secondary sector (+1.5%) but dragged down by agriculture (-2.6%). Services grew +0.3% m/m. Compared to April 2018, economic activity expanded by +0.3% y/y after contracting by -0.6% in March. We are in a lower regime of growth: the 12-month average growth pace fell to +1.4% from +2% last November. The carry-over for 2019 is now slightly negative (-0.03%), which comforts our GDP growth forecast of +1% in 2019 and +1.5% in 2020 after +2.1% last year. Besides, the threat of U.S. tariffs on exports remains. The U.S. and Mexico administrations will review the result of Mexico’s ramped up migration policy on 22 July and then on 5 September. A failure to reach the goals agreed could then trigger the imposition of tariffs, which could subtract -0.6pp from Mexican GDP growth (with tariffs up to 10% held until November) or would sink the country into recession (with 25% tariffs).
