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Mexico GDP Q4 2021

Mexico: GDP falls at a more moderate rate in the fourth quarter

According to a preliminary reading, GDP contracted at a more moderate pace of 0.1% on a seasonally-adjusted quarter-on-quarter basis in the fourth quarter, above the 0.4% contraction tallied in the third quarter. As a result, GDP is still notably below its pre-crisis level.

The services sector contracted 0.7% over the previous quarter in seasonally-adjusted terms in Q4, a less pronounced drop than the third quarter’s 0.9% decrease. The services sector continued to be held back by the lingering impact of the law banning labor outsourcing that was approved last year. Meanwhile, the industrial sector gained steam, growing 0.4% in Q4 (Q3: +0.3% s.a. qoq), likely aided by a slight recovery in vehicle production. Primary sector growth fell to 0.3% in Q4, marking the worst result since Q1 2021 (Q3: +1.3% s.a. qoq).

On an annual basis, economic growth slowed markedly to 1.0% in Q4, compared to the previous period’s 4.5% increase. Q4’s reading marked the softest expansion since Q1.

The economy is expected to recover somewhat in the first quarter of this year, although the recent surge in Covid-19 cases, elevated inflation, tighter monetary policy and a weak business environment will likely keep growth subdued nonetheless.

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