Mexico's economy enters technical recession as GDP shrinks again
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Loading... - Sharon Lambert
- 01 Feb 2022
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Mexico’s economy contracted for a second straight quarter in the last three-month period of 2021, according to official data published on Monday, putting it in a technical recession and joining regional powerhouse Brazil, whose economy fell back into negative territory last year.
Gross domestic product (GDP) in Latin America’s second-largest economy shrank in the fourth quarter by 0.1 percent from the previous three-month period in seasonally adjusted terms, showed preliminary data published by Mexico’s National Institute of Statistics and Geography (INEGI).
That beat out expectations in a Reuters news agency poll for GDP to contract in the fourth quarter by 0.3 percent, after the economy declined by 0.4 percent in the third quarter.
Mexico’s Deputy Finance Minister Gabriel Yorio said Friday that talk of a “technical recession”, defined as two consecutive quarters of contraction, does not take into account coronavirus-related economic volatility and global supply chain issues.
Yorio said that global supply-chain bottlenecks, increased prices for raw materials, and higher costs for ground transportation and sea shipping are weighing on the economy.
“With its weak Q4 outturn, Mexico has joined Brazil in technical recession, an extremely disappointing result that leaves real GDP in Mexico a whopping 4 percent below its mid-2019 pre-COVID peak,” said Fiona Mackie, regional director for Latin America and the Caribbean at The Economist Intelligence Unit.
Brazil’s weakened economy is in danger of sinking deeper into recession this year ahead of October’s presidential election, as anxiety over the vote and steep interest rate rises continue to hurt growth, according to a Reuters news poll.
Jonathan Heath, a board member of Mexico’s central bank and one of its most outspoken, jumped into the fray over where the Mexican economy stood at the end of last year.
“The idea that the economy is in a recession because there were two consecutive quarters with a negative GDP rate is a simplification of what a recession is,” said Heath on Twitter.
“If there are two quarters in a row with negative GDP, it increases the possibility that there is a recession, but that is not enough by itself. A recession has to comply with three requirements: depth, duration, and spread. For now, we comply only with duration. Read More…
