The Mexican economy grew at a slightly slower pace than the preliminary forecast in Q2 despite benefiting from robust trade with the US and its own strong consumption.

GDP rose 0.8% from the prior three months, falling short of the 1% average estimate by economists within a Bloomberg survey and the 0.9% reading published in July.

Compared to the same time last year, GDP grew 3.6%, under the initial 3.7% figure, as per final data released by Mexico’s National Statistics Institute on Tuesday.

The US has been feeding Mexico “via remittances, tourism, and imports, mainly of cars and SUVs. Manufacturing companies have been relocating several lines of production from Asia and Eastern Europe to Mexico, mainly because of geopolitical tension,” said Gabriel Casillas, Barclays Plc’s chief Latin America economist.

The downward revision can partly be explained by the statistics institute’s modification in the base year for comparisons. This led to the downward revision of the services sector from 1% to 0.7% and the agricultural sector from 0.8% to 0.7%. Whereas the industrial sector was upwardly revised to 1.2% compared to the previous quarter.

However, optimism still surrounds Mexico’s economic outlook. According to a Citi poll last week, analysts forecast GDP to grow 2.9% in 2023, up from a 2% prediction at the beginning of June. A Bloomberg poll in August sees Mexico’s growth at 3% at the end of the year.

“Monthly data for June and revised second-quarter GDP numbers show strong activity and domestic demand in Mexico. Below-consensus prints should moderate expectations but still support a positive growth outlook. Data came in above central bank forecasts and signalled above-potential growth and little economic slack. That reduces the probability of interest-rate cuts this year. Government policies and tight monetary conditions are holding back growth, and a potential recession in the US is the main risk,” said Felipe Hernandez, Bloomberg Latin America economist.

Whereas Bank of America’s head of Mexico and Canada economics, Carlos Capistran, added: “Despite the revision to the downside, growth remains quite strong in Mexico. There are three main reasons: the US has also surprised to the upside in a big way, nearshoring and public construction.”