Mexico Undergoing Technical Recession
INEGI’s 4Q2021 figures show that Mexico’s GDP contracted 0.1 percent during the quarter, putting the country in a technical recession after six consecutive months of stagnant growth. President Andrés Manuel López Obrador denied that the economy was in recession, claiming that his administration is focused on the well-being of citizens.
During the quarter, the primary sector GDP (which includes agriculture and livestock activities) rose 0.3 percent, while the secondary sector (which involves manufacturing industries) GDP grew 0.4 percent, reported INEGI. However, the tertiary sector GDP (which involves the service industry) contracted 0.7 percent.
This is Mexico’s second consecutive quarter without economic growth, which economists call a “technical recession.” To date, López Obrador’s government has registered six quarters with GDP growth and six with contractions. With the drop in 4Q2021, the economy remains 3.0 percent below pre-pandemic levels. While Mexico’s GDP grew 5 percent during 2021, it was not enough to bounce back from 2020’s 8.4 percent drop, a phenomenon known as “negative growth.”
Several financial institutions tempered their growth forecasts in the wake of INEGI’s report. Banxico, BBVA and Citibanamex’s GDP growth forecasts remained between 2-3 percent. However, President López Obrador said that Mexico’s economy will grow 5 percent in 2022 and 2023. He also denied claims of a recession: “We are not in a recession because the country grew 5 percent [in 2021] but fell for two quarters. We were growing and the new COVID-19 variant came to us.”
During his Morning Press Conference, when questioned on the measures taken to improve the economy, the president said that his government thinks beyond economics because his administration focuses on the well-being of citizens. “My ideal situation would be that, despite the pandemic, we obtain more than 2 percent annual growth in the six-year term; but I am going to continue working in the improvement of Mexico, economic growth, development and the well-being of the people,” he stated.