Mexico entered a mild recession in 2019

The numbers contrast with López Obrador's presidential campaign

Mexico entered a mild recession in 2019
Mexico has focused on investing in Pemex and welfare programs - Photo: Edgard Garrido/REUTERS
English 26/11/2019 14:12 Reuters Mexico City Dave Graham Actualizada 14:12
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According to the INEGI, Mexico's statistics agency, the economy entered a mild recession during the first half of 2019 and was flat in the third quarter.

The figures showed the economy contracted by 0.1% quarter-on-quarter in seasonally-adjusted terms during both the first and second quarters of 2019 after also shrinking by the same margin in the last three months of 2018.

Economists define as two consecutive quarters of contraction in gross domestic product.

Mexico's central bank cuts GDP growth forecast to 1.1-2.1%

In a preliminary estimate published in late October, the INEGI reported that the economy grew by 0.1% from the previous quarter during the July-September period. However, that figure was revised down to show the economy stagnated.

Alberto Ramos, a Goldman Sachs economist, said the bank now expected no growth to be registered in Mexico in 2019 after the GDP advanced by 2% last year.

In 2020, the economy should bounce back somewhat, expanding by 1.1%, lifted by several factors including a recovery in oil and gas output, construction activity, wage gains, and a pick-up in public sector spending, he said.

Investor confidence in Mexico, Latin America’s second-largest economy, has been shaken by a number of policies implemented by López Obrador.

Mexico central bank further slashes growth forecast for 2019

In particular, his decision to cancel a partly built, USD $13 billion airport in Mexico City and his retreat from the prior government’s opening of the oil and gas industry to private capital have raised doubts about his economic management.

When López Obrador took office in December 2018, he pledged to ramp up growth to 4% per year. Instead, the economy has slowed down, and he has sought to deflect criticism by saying poorer parts of Mexico have benefited more from his policies.

The INEGI’s data showed that during the first nine months of 2019, Mexican GDP was unchanged in adjusted terms compared with the same period last year.

A breakdown of those figures showed that secondary activities, which include manufacturing, slipped 1.7% from the previous year during the January-September period.

Tertiary activities, which capture services, rose by 0.6%, while primary activities, which cover farming, fishing, and mining, rose by 2.2%, the agency said.

In unadjusted terms, the economy shrank 0.3% from a year earlier during the third quarter, the data showed.

Economic stagnation in Mexico


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