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Mexico’s economy contracted for the first time in 10 years in 2019

MEXICO (OBSERVATORY NEWS) — Mexico’s economy contracted in 2019 for the first time in ten years amid falling industrial production and investment.

GDP in the IV quarter fell by 0.1% compared with the previous quarter, according to revised data from the National Statistical Institute. Preliminary data indicated zero growth.

In annual terms, Mexico’s GDP fell in the IV quarter by 0.5%.

Overall, in 2019, Mexico’s economy contracted 0.1% after rising 2.1% in 2018. The year-end decline was recorded for the first time since the 2009 global crisis.

Industrial production in the country last year fell by 1.8%. Service growth slowed to 0.4% from 2.9% in 2018.

The weak investment is mainly due to a change of government and certain policies of President Andrés Manuel Lopez Obrador, such as curbing the opening of the energy sector to private and foreign investment, notes The Wall Street Journal.

While foreign direct investment in Mexico was stable last year at around $ 33 billion, private and public fixed investment in the first 11 months of last year fell 5.1%.

Earlier this month, the Central Bank of Mexico lowered its base interest rate for the fifth consecutive meeting – by 25 basis points to 7%. The balance of risks for the economic forecast is shifted downward, the regulator noted.

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