Mexico | GDP measured by the demand side and the supply side tells a different story

The matching of GDP growth rates measured by expenditure components and that measured by production value has deteriorated consistently, and recently more sharply.

Key points

• Key points:
• In practice, GDP growth measured on the supply side should be very similar to that measured by expenditure components; in Mexico, this is not the case. Although the parallel between the original series is high with seasonally-adjusted series, one may even grow when the other decreases, which significantly hinders economic analysis
• The deterioration in the pairing shown by both measurements in Mexico suggests that it is time for INEGI to move the measurement of GDP to the methodology that aggregates the expenditure components, similar to that used by the Bureau of Economic Analysis in the US
• Together with the measurement of GDP by expenditure components, it is essential to change to the indirect seasonal adjustment method to ensure that economic growth can be easily interpreted in terms of the development of private consumption, government consumption, private and public investment and net exports

Authors

Geographies

Topics

Tags