OCTOBER GDP PROXY (IGAE)

Statistics agency Inegi published the monthly GDP proxy, the Igae, which is one of the broadest measures of economic activity available to number-crunchers.

The good news is it showed the economy expanding at a 5.9% rate on a seasonally adjusted, month-to-month, annualized basis. That is robust and in line with the private sector consensus for a 2010 GDP result of 5.1%, according to the most recent Bank of Mexico survey. The Finance Ministry also said last week that 2010 GDP would exceed 5%.

The bad news is that the economy did hit a soft patch going into the fourth quarter. On a four-month moving average, GDP was up 4.2% -- none too shabby, but below the 7% averages seen earlier in the year.

On a straight unadjusted basis, the IGAE index stood at 121.28 (2003=100) in October 2010, -1.4% from the peak in October 2008. A strange month for a peak, given the financial chaos then, but that is roughly where the economy stood before the recession kicked in during Q407, so it is fair to say that the Mexican economy has almost returned to pre-recession levels.

In terms of the industrial sectors, which did peak right before a severe recession in October 2007 at 121.03, the sub-index reached 117.72 in October 2010, only 2.7% lower than pre-recession levels.

In other words, by the end of 2010, Mexico will likely have finally regained the ground lost during the steep recession of 2008-09.


HEADLINE IGAE INDEX

INDEX | Annualized Var. | 4mo Ave.
113.63 | -12.55% | 4.69%
114.48 | 9.32% | 5.76%
116.66 | 25.42% | 7.87%
116.42 | -2.42% | 4.94%
117.11 | 7.35% | 9.92%
116.82 | -3.01% | 6.83%
117.45 | 6.70% | 2.16%
118.04 | 6.24% | 4.32%
117.84 | -2.05% | 1.97%
118.41 | 5.92% | 4.20%