It marks the worst year for the second-largest economy in Latin America since 1932 and two consecutive years of recession.
The Mexican economy suffered during 2020 its largest contraction in decades, of 8.5% at an annual rate, mainly caused by the collapse in the country’s industry in the face of forced closures by the pandemic, according to preliminary data published on Friday by the local statistical institute, INEGI.
The drop in Gross Domestic Product (GDP) was slightly less than estimated in a Reuters poll, of 8.8%, and marks the worst year for the second-largest economy in Latin America since 1932, during the Great Depression, according to figures from the National Autonomous University of Mexico.
“The degree of recovery in 2021 will depend on the success of the vaccination campaign (time and scope),” wrote Alonso Cervera, chief economist for Mexico at Credit Suisse on his Twitter account.
In the breakdown by type of activities, the strong annual decline of 10.2% in secondary activities, led by the country’s manufacturing, which was severely affected by the pandemic, stood out.
On the other hand, the services sector registered a more moderate fall, of 7.9% throughout 2020, according to seasonally adjusted figures, while the primary sector expanded by 2%.
In the fourth quarter alone, the Mexican economy grew 3.1% compared to the previous quarter, INEGI said, beating the 2.8% forecast in the Reuters poll, and extending the recovery to two periods.
This (quarterly) data suggests that the economy recovered 70% of the losses in the first half of 2020, ” said Nikhil Sanghani, an economist at Capital Economics. “However, the rebound in COVID-19 cases will slow down the recovery in the first quarter of this year.”