Last year was a difficult year for global economies. However, for Mexico it was the worst economic year since the Great Depression.
Mexico, the world’s 16th largest economy and the second-largest in Latin America, saw its economy contract by a sizeable 8.5%. It was also the second year of contraction for Mexico as the economy was already in a recession before the pandemic landed.
However, there were some positives in the latest economic news. According to preliminary data released Friday by the National Statistics and Geography Institute, the Mexican economy grew 3.1% in the final quarter of 2020, after growing 12% in the third quarter. The rebound in the final quarter of a challenging year, meat that the Mexican economy has now recovered more than 70% of its losses from the first half of last year. The 3.1% was also higher than the 2.8% predicted by analysts.
Also, another positive is that the 8.5% contraction was, in fact, less than the 8.8% predicted by analysts, as an unexpectedly robust performance in the final quarter of the year.
Mexico’s Slow Response to the Pandemic
The Mexican government has come under strong criticism for its response to the pandemic. Unlike many countries, Mexico’s government did little to subsidize consumers or support businesses. President Andrés Manuel López Obrador refused to indebt the country to soften the economic impact of the pandemic.
Alfredo Coutiño, director of Moodys Analytics said:
“The 2020 economic plunge is the reflection of not only the devastating effects of the virus pandemic but also the lack of preparedness and insufficient policy response of the current administration,”
“The government’s decision of not implementing a rescue package to support businesses and mitigate the loss of employment took a heavy toll in terms of business mortality and well-being deterioration,”
Alfredo Coutiño
What’s Next for Mexico?
Despite the strong end to the year, there are underlying problems with the Mexican economy. The vaccine rollout only began on December 24th and like the EU is struggling to source enough doses for its 124 million population.
Mexico also has one of the world’s highest death tolls from COVID-19. SO far, it has recorded more than 155,000 COVID-19-related deaths and, over 1.8 million known cases of infection.
Employment is a major issue too. Mexico ended last year with 840,000 fewer jobs than it had in February before the impact of the pandemic started to be felt.
