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Mexico GDP Q1 2020

Mexico: Economy contracts at steepest rate since 2009 global financial crisis in Q1

In the first quarter of 2020, the economy contracted for the fourth quarter in a row and at the steepest pace since Q4 2009, according to a preliminary GDP estimate released by the Statistical Institute (INEGI) on 30 April. Economic activity declined 1.6% in year-on-year, unadjusted terms in Q1, more sharply than the 0.5% contraction logged in Q4 2019 but landing slightly above market expectations. On a seasonally-adjusted, quarter-on-quarter basis, output also shrank 1.6%, following the previous quarter’s 0.1% slip.

The contraction partly reflected the impact from Covid-19 and associated containment measures which suspended non-essential activities starting 24 March. Continued weakness of the industrial sector and a sharp pullback in services led the first-quarter downturn. Industrial-sector output plunged 3.2% year-on-year, following the 2.1% decline in Q4 2019 and marking the sharpest drop in over a decade. Similarly, services-sector activity tumbled 0.9% on an annual basis after flatlining in the previous quarter—a rate not seen since the 2009 global financial crisis and suggesting that Q2’s outturn will fare even worse as the Covid-19 related restrictions are set to last until May. Meanwhile, agricultural production lost pace again, expanding a modest 1.5% in the quarter (Q4: +1.6% year-on-year).

The INEGI will release a second GDP estimate on 26 May.

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