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Industrialists perceive a weakness in the economic activity of the country and Nuevo León

Industrialists perceive a weakness in the economic activity of the country and Nuevo León

August 6, 2019

CAINTRA Nuevo León has closely followed the behavior of the economic activity of the country and the state. Through the review of official indicators, the collection of surveys among the state's industry and with our partners opinion, we have carried out an analysis of the current situation. For industrialists, the economic activity is in a stagnation situation, as shown by the recent results of the GDP in the country.

Although the economy continued to grow during the first quarter, from April to May there is a panorama characterized by the slowdown in the main indicators. On the one hand, we observe that both public and private investment have declined. Although in Nuevo León it seems that investment still doesn't stop, as shown by our survey of industrialists, data from INEGI nationwide indicate that in May the investment fell 7.4%. On the other hand, public investment maintains an important setback, until June it accumulates a fall of 17.1%.

An economy with low investment cannot sustain a rapid growth rate. This is reflected in a decline in industrial production and the jobs generation that is practically detained. To give an example, in May IMSS reports the creation of only 3,900 jobs, the lowest figure in the year and maintaining a negative trend. In addition to this, consumers, industrialists and merchants confidence maintain a pronounced downward trend that leads to a fall in consumer spending. In addition, light vehicle sales total five months in negative territory. Nuevo León is in a similar sisituation, since April no new jobs have been generated.

Despite this panorama, there are indicators that maintain growth, which, if continued, could reverse the trend of the economy and generate growth for the second half of the year. Among these, we can mention exports, which have accelerated in April and May, reaching a growth of up to 10%. As well as the level of inflation that continues to fall, favoring price stability. As well as the level of inflation that continues to fall, favoring price stability.

Given this panorama and in line with the rest of the international and private organizations, the growth forecast for this year 2019 is reduced. In particular, the Chamber considers that the economy could expand 0.9% this year, against 1.7% of two months before, considering a rebound in activity for the second semester. On the other hand, economic activity in Nuevo León would also face lower growth, which we estimate an expansion of 2% for this year.

At CAINTRA, we urge federal authorities to reactivate public spending and investment as a mechanism of economic stimulus. Likewise, it is important to generate certainty for the different economic actors, which affect growth and confidence perspectives of the sectors. The Chamber has had important approaches with the federal authority, taking proposals under this approach.

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