Mexico’s economy grew by five percent in 2021, but Latin America’s second biggest economy headed into technical recession at the end of the year after contracting for a second-straight quarter, preliminary official data showed Monday.
Economic activity slowed by 0.4 and 0.1 percent in the last two quarters of 2021, compared to the previous three-month periods, according to the data from national statistics institute INEGI.
Analysts Capital Economics said in a statement to clients that the fourth quarter data “confirmed that the economy slipped into a recession over the second half of 2021, and we think growth this year will be weaker than most expect.”
Central bank analysts expect the economy to grow 2.7 percent in 2022.
The Mexican economy had shrunk by 8.4 percent in 2020 as the coronavirus pandemic caused mass shutdowns — with 4.9 million Covid-19 cases and more than 300,000 deaths in the nation of 129 million.
INEGI said industrial activity, which represents close to a third of GDP, grew by 6.8 percent last year.
Services, worth 60 percent of GDP, rose by 4.2 percent while so-called primary activities — such as farming, fisheries and natural resources extraction — grew just 2.7 percent.
Rather than direct aid to businesses, the government of President Andres Manuel Lopez Obrador has concentrated its pandemic recovery efforts on social programs and investment in public works, such as the new airport in Mexico City and an oil refinery in the southeast.