Mexico’s economy entered a mild recession during the first half of 2019 and was flat in the third quarter, revised data from the national statistics agency showed on Monday, handing a setback to the plans of President Andres Manuel Lopez Obrador.
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The updated 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 last year.
A recession is usually defined by economists as two consecutive quarters of contraction in gross domestic product.
In a preliminary estimate published at the end of October, the agency 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 in a note to clients the bank now expected no growth to be registered in Mexico in 2019 after GDP advanced by 2% last year.
Next year, the economy should bounce back somewhat, expanding by 1.1%, lifted by several factors including a recovery in oil and gas output, stronger 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 policy moves made by Lopez Obrador, an exponent of economic nationalism.
In particular, his decision to cancel a partly built, $13 billion airport for 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.
The veteran leftist took office in December 2018 pledging to ramp up growth to 4% per year. Instead, the economy has slowed, and he has sought to deflect criticism by saying poorer parts of Mexico have benefited more from his policies.
The statistics agency’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.
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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.