Mexico’s economy enters technical recession

Mexico's economy contracted for a second straight quarter in the last three-month period of 2021, according to official data published on Monday, putting it in a technical recession and joining regional powerhouse Brazil, whose economy fell back into negative territory last year.

Gross domestic product (GDP) in Latin America's second largest economy shrank in the fourth quarter by 0.1 per cent from the previous three-month period in seasonally adjusted terms, preliminary data published by Mexico's INEGI national statistics agency showed.

That beat out expectations in a Reuters poll for GDP to contract in the fourth quarter by 0.3 per cent, after the economy declined by 0.4 per cent in the third quarter.

Mexico's Deputy Finance Minister Gabriel Yorio said Friday that talk of a  "technical recession," defined as two consecutive quarters of contraction, does not take into account coronavirus-related economic volatility and global supply chain issues.

Yorio said that global supply bottlenecks, increased prices for raw materials, and higher costs for ground transportation and sea shipping are weighing on the economy.

"With its weak Q4 outturn, Mexico has joined Brazil in technical recession, an extremely disappointing result that leaves real GDP in Mexico a whopping 4 per cent below its mid-2019 pre-Covid peak," said Fiona Mackie, regional director for Latin America and the Caribbean at Economist Intelligence Unit.