Mexico’s economy failed to grow in the fourth quarter 2019 compared with the previous three months and contracted last year for the first time in a decade, after struggling on the brink of recession in the first year under leftist nationalist Andrés Manuel López Obrador.
The result nonetheless beat market expectations: analysts had forecast a contraction of at least 0.1 per cent in seasonally-adjusted terms compared with the previous quarter. Compared with the fourth quarter of 2018, the economy contracted 0.3 per cent, according to preliminary data from state statistics office Inegi.
As a result, Mexico’s economy contracted in the final quarter of 2018 and the first and second quarters of 2019 and was moribund in the third and fourth quarters, despite the president’s promise of 2 per cent growth last year.
Expectations of a rebound in Latin America’s second-biggest economy were already flagging. The IMF earlier this month trimmed its 2020 forecast to 1 per cent from 1.3 per cent in October.
Barclays, among the most bearish on Mexico’s outlook, last week slashed its growth expectation to just 0.6 per cent from 1.4 per cent. The consensus forecast for 2020 is 1 per cent, according to a fortnightly survey by Citibanamex.
“There are more risks to the downside,” said Marco Oviedo, chief economist at Barclays. “If there’s a recovery it won’t be now but in the second half or next year.”
Inegi could still revise down the quarterly data, as it did last year. Mr Oviedo said, however, that the annual figure was in line with his expectations so he would not be revising his 2020 forecast.
Source: Economy - ft.com
