Mexico’s Economy Slows Down, As Industrial Output Shrinks Significantly

Mexico’s economy slowed down significantly in 2019, as uncertain policy decisions forced businesses to put their investment plans on hold.

The GDP shrank 0.1% following a sharp decline in industrial production and a slowdown in the services sector, according to data released by the National Statistics Institute.

This is Mexico’s weakest economic performance since the recession of 2009. The country had reported a 2.1% growth for 2018 when Andrés Manuel López Obrador (AMLO) took over as the president.

The sudden slowdown in oil & gas and services sector must have increased unemployment rate, say analysts.

Economists are blaming AMLO’s ‘confusing’ policy decisions for the slowdown. Soon after taking office, he restricted new oil auctions and stopped the construction of a new international airport in Mexico City.

Considering the data, Mexico’s economy was the worst performer among its emerging peers last year. With foreign investment continuing to decline, analysts say the economy will remain sluggish throughout this year.

President AMLO has not expressed worry at the declining growth. In his weekly media briefing, the President said the slowdown was expected and the economy would rebound soon.

Meanwhile, the U.S., Mexico, Canada Agreement, or USMCA, is looking set to come into force shortly, with the US Congress ratifying the agreement recently.

If the global economy rebounds, Mexico may also see its industrial output increase in size. The country’s services sector, which grew barely 0.3% during the fourth quarter of 2019, may boom once the new free trade agreement comes into place, say some analysts.