Mexico's economic slump eases in third quarter

Jean Luis Arce
·2-min read
A health worker takes the temperature of a homeless man in Mexico City during the coronavirus pandemic
A health worker takes the temperature of a homeless man in Mexico City during the coronavirus pandemic

Mexico said Friday its economy, the second-biggest in Latin America, showed signs of recovery in the third quarter after it relaxed pandemic control measures that had triggered an unprecedented slump.

Gross domestic product (GDP) rebounded 12.0 percent in the July-September period from the previous quarter, the most since record-keeping began several decades ago, according to an official preliminary estimate.

Compared with a year earlier, GDP was down 8.6 percent, national statistics institute INEGI reported.

"Our economy is recovering," said President Andres Manuel Lopez Obrador.

"Our forecast is coming true that we would fall due to the pandemic, but rebound quickly, like a V," he told reporters.

The economy suffered a record 18.7 percent plunge in the second quarter from a year earlier after the country was semi-paralyzed by lockdown measures.

Mexico has registered more than 90,000 coronavirus deaths -- one of the world's highest tolls.

The government imposed lockdown measures at the end of March and started gradually reopening the economy in June.

A rise in employment in September and October means the labor market could return to pre-pandemic levels by the end of the first quarter of 2021, Lopez Obrador said.

- 'Second wave' -

Analysts, however, struck a more cautious tone, saying that the economy still faces a difficult path ahead.

"The recovery is far from complete," said Gabriela Siller, an economist at Banco BASE, noting that Mexico was still in the grips of the pandemic.

"A second wave (of infections) is likely to slow down the recovery," she warned.

The Mexican economy has now posted six straight quarters of year-on-year declines, something not seen since 1983 during a severe financial crisis, Siller noted.

Some analysts have criticized Lopez Obrador for not spending more to boost the economy, particularly the private sector, in the face of the coronavirus outbreak.

The left-wing populist says his priority is helping ordinary Mexicans with social aid and loans while avoiding saddling the country with increased debt.

The central bank warned last month that the economy was in danger of shrinking by 12.8 percent for the whole of 2020 if the pandemic worsens.

The International Monetary Fund has urged Mexico to do more to boost the economy with fiscal and monetary stimulus.

It forecasts that Mexican GDP will shrink 9.0 percent in 2020 before rebounding 3.5 percent in 2021.

The government announced a $14 billion investment plan this month in cooperation with the private sector to boost the economy through infrastructure projects.