Mexico’s economic rebound after the pandemic is deflating. The country’s GDP fell 0.4% in the third quarter compared to the previous three months, the National Institute of Statistics and Geography (Inegi) revealed this Thursday. After four consecutive quarters of positive growth data, the economy is contracting for the first time since the start of the reopening. The figure is a sign, yet another, that the recovery has stalled.
The fall is greater than the one initially estimated by Inegi, 0.2%, and is explained, above all, by the poor performance of the tertiary sector, the largest in the economy, which contracted 0.9% compared to the second trimester. The primary sector, which includes agricultural activities, grew by 1.3% and the industrial sector increased by 0.3%. The activities that presented the greatest contractions were business support services, with a quarterly reduction of 48%, electricity generation and distribution, with a 1.6%, and financial services, with a 1.4% decrease .
If we compare the third quarter of this year with the same period in 2020, the economy does show growth of 4.7%. From this perspective, the industry advanced 5%; the services sector, 4.4%; and primary activities, 0.3%. It is normal, however, that the annual comparison casts a more positive light due to the historic downturn that the economy suffered last year, when it contracted by 8.5%, the biggest drop since the 1930s. The quarterly data gives a clearer idea of the speed of the recovery.
There were already signs that the rebound was losing steam. Immediately after the reopening, in the third quarter of 2020, GDP grew 12% compared to the previous three months. Since that big jump, however, quarterly growth data has become increasingly modest. In the second quarter of this year, for example, the economy advanced just 1.5% quarterly. In September, industrial production fell 1.4% compared to October and was at the lowest level in a year, another sign of stagnation.
Initial optimism, after going through the hardest part of the pandemic, has been declining. The rapid reactivation has caused capacity problems in the transport of maritime cargo, as well as a shortage of certain industrial products, such as the microchips used by automotive factories, the backbone of the Mexican export sector. In October, several assemblers had to carry out technical stoppages due to a lack of material and car production fell 26% compared to the same month last year.
Added to the problems in supply chains is the economic slowdown in the US, Mexico’s main trading partner. In the third quarter, the economy grew 2% annually, compared to 6.7% in the second quarter, the worst growth figure since the reopening. “An uncertain environment remains and slack conditions are expected, with marked differences between sectors,” Banco de México said at the beginning of November about the prospects for the Latin American country’s economy.
Despite the disappointing data, President Andrés Manuel López Obrador has insisted this Thursday on the goal of 6% growth for 2021. “The economy is growing and the forecast that it will grow this year will be fulfilled. % and yes it was a ‘v ”, he declared at a press conference. In August, Banco de México projected growth of 6.2%. It remains to be seen whether it will maintain that forecast in its next quarterly report.
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