The slowdown of the Mexican economy has crystallized in the last year. Mexico’s Gross Domestic Product (GDP) fell 0.1% during 2019, According to data published Thursday by the National Institute of Statistics and Geography (Inegi). This is the first time in ten years that the growth of the second economy in Latin America is negative, something that had not happened since 2009 when Mexico was recovering from the global economic crisis.
The fall of economic growth has marked the first year of the Government of Andrés Manuel López Obrador, who has sought, in recent months, tools to boost economic activities. In November, it announced an infrastructure plan of $ 42 billion for the next five years; In addition, this week has created an economic growth cabinet headed by Alfonso Romo, head of the Presidency office, to accelerate investments that arrive in the country.
López Obrador It has minimized the information of the Institute of Statistics and has indicated that although there is no growth, Mexican families have “more purchasing power”. “They are changing the parameters to measure if we have well-being in Mexico. As I have other data, I can tell you that there is well-being. It may be that there is no growth but there is development and there is well-being, which is very different, ”he said in your morning conference at the National Palace. The president began his daily intervention with an announcement about the supply of chicken and the reduction in its price. “I care a lot about the family economy,” he said.
The Inegi analysis shows that in the fourth quarter of 2019 the economy contracted 0.3% compared to the same period of 2018. The biggest drop is in the secondary activities – the manufacturing, mining and construction industry – which decreased 1.5%. While primary activities –agriculture and livestock– grew 1.9% and tertiary activities –services– advanced 0.1%. With the end of the year, the latest figures show that in the last months the economy stagnated after entering recession in the first six months.
During 2019, the business sector had pointed to the Mexican Government as responsible for the economic slowdown to stop promoting infrastructure projects and generate an atmosphere of uncertainty with the cancellation of New Mexico City Airport. “In Mexico it has been observed that during the first year of each Administration there is an economic slowdown, either due to the learning curve in the first months of the new president, due to the uncertainty of new public officials, or investment decisions and public spending, ”says in his analysis the think tank Mexico How are we doing?
López Obrador has insisted that there is an adequate economic context for growth in 2020. His Administration trusts that the entry into force of the new Free Trade Agreement with the United States and Canada (TMEC) and the adjustments of the last months contribute to boost the indicators. The Mexican president had promised at the beginning of his Government, in December 2018, that the country would grow 4% a year.
By 2020, growth expectations are light. The World Bank recently adjusted its estimate from 2% to 1.2%. While the International Monetary Fund (IMF) changed its estimate from 1.3% to 1%. Analysts consulted by the Bank of Mexico have indicated that the country could grow by 1%.
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