Mexico's GDP rebounds 12% in the third quarter

02/11/2020

Mexico's Gross Domestic Product (GDP) increased by 12 percent in the third quarter of the year compared to the previous quarter, according to a timely estimate by the National Institute of Statistics and Geography (Inegi).

With respect to activities, the progress compared to the previous period (i.e., the second quarter of this year) is primary (7.4 percent), secondary (22 percent), and tertiary (8.6 percent). The Mexican economy had just suffered an unprecedented collapse of 17.1 percent in the April-June period as a result of the restrictions applied to the advance of the COVID-19 pandemic.

Non-essential economic activities were closed for part of March and all of April and May. In June, the government began the 'new normal' phase where it was determined that the reopening would be guided by a risk light. Since that date, the economy has been showing signs of improvement: the Global Index of Economic Activity (IGAE), which works as a 'monthly GDP' has been rising for four consecutive months (in September with the indicator ahead of schedule).

Another 'symptom' of an economic recovery, which the Government estimates would be in the form of a 'Nike dove', is the generation of employment. After more than 1,100,000 formal jobs were lost in the harshest months for the economy, in August the creation of 92,390 jobs was reported, a trend that continued in September, with another 113,850, according to data from the Mexican Social Security Institute (IMSS).

In the middle of this month, President Andrés Manuel López Obrador stated that another 100,000 formal jobs had been created in the tenth month of the year and even predicted that those lost to the pandemic would recover in the first quarter of next year. The Government announced in October a new investment package with the Private Initiative of 39 projects for an amount of 297 thousand million pesos, of which seven are already underway.

Among the sectors included is the energy sector, which would receive an additional package next November, according to the Business Coordinating Council. News that feeds the possibility that the recovery will extend comes from the north. After suffering its worst historical fall in the second quarter, the U.S. economy rebounded in the following period, to grow at an annualized rate of 33.1 percent.