Confirmed: Mexico's GDP has its first drop in a decade

26/02/2020
The Mexico GDP figure represents the first contraction for a year in Latin America's second largest economy since 2009.
The Mexico GDP figure represents the first contraction for a year in Latin America's second largest economy since 2009.

The Mexican economy, measured through the gross domestic product (Mexico GDP), contracted 0.1% in 2019, its first fall in a decade, according to a report by the National Institute of Geography and Statistics (INEGI) released Tuesday.

The figure represents the first annual contraction of the second largest economy in Latin America since 2009, when Mexico's GDP fell just over 5% hit by the global financial crisis.

According to INEGI, the GDP of the fourth quarter of the year, the first of the government of President Andres Manuel Lopez Obrador, also recorded a decrease of 0.1% in real terms compared to the same period in 2018.

This situation reflected that every quarter of production decreased compared to the immediate previous period.

In this regard, Alfredo Coutiño, economic director of Moody's Analytics, said that for this year is outlined a growth of about 1%, "if and only if investment in infrastructure is materialized.

Only in the fourth quarter, the country's economy contracted 0.4% at an annual rate, the strongest fall in 2019. In the first, the figure was 0%, while in the second advanced 0.1%, and in the third fell 0.2%, according to data from the institution.

The -0.1% recorded by INEGI coincides with the forecast of the Bank of Mexico (Banxico), which last November revised downwards its forecast and placed it in a range between -0.2% and 0.2%.

In the classification by economic sphere, primary production, including livestock, fishing, hunting, and forestry, reached a growth of 2.0%. Meanwhile, the total production of services and trade barely reached an expansion of 0.5%, according to the INEGI.

As a result of the drop in GDP, the production of secondary activities, which include manufacturing, construction, mining, and energy activities, fell 1.8% compared to 2018.

The figures also represent a bucket of cold water for the 4% average growth promised by López Obrador, who took office in December 2018.

Source INEGI press release

Mexico launders a third of its GDP: Public Function

"Mexico, more or less, launders a sum equivalent to one third of its Gross Domestic Product (GDP) in the international financial laundering centers," informed the Secretary of Public Administration (SFP), Irma Eréndira Sandoval Ballesteros.

For his part, the head of the Financial Intelligence Unit (FIU) of the Ministry of Finance and Public Credit (SHCP), Santiago Nieto Castillo, said that "it is estimated that 70% of it goes to Latin American countries."

The aforementioned, both officials declared in the framework of the signing of the collaboration agreement against corruption involving the two agencies.

Castillo Nieto said that Mexico has become in recent years an ideal country for ghost companies, with benefits, even for political parties, which caused negative effects: political corruption, diversion of resources for electoral campaigns or use of public funds in tasks not destined for it.

By Mexicanist