The coronavirus pandemic and associated restrictions ravaged Mexico’s economy in May, new data shows.

The national statistics institute Inegi reported Friday that economic activity declined 21.6% in May compared to the same month of 2019. The contraction was the worst year-over-year decline since comparable economic records were first kept in 1993.

May was the second full month in which nationwide coronavirus restrictions were in force. The economic slump in the fifth month of the year followed a 19.67% annual contraction in April.

Activity in the tertiary sector of the economy, which includes services and retail, declined 3.2% in May compared to the previous month, Inegi said. The result will have a significant impact on Mexico’s overall economic performance this year as the tertiary sector contributes to about 65% of Mexico’s GDP and employs more than half of all Mexican workers.

Secondary activities, including manufacturing, mining and construction, fell 1.8%, Inegi said.

The only bright spot was that the primary sector, which includes farming and fishing, grew 1.6%.

Mexico’s economy is forecast to suffer a deep recession in 2020 as the coronavirus pandemic continues to exact a heavy toll on the country.

The International Monetary Fund is predicting that GDP will shrink 10.5% this year, more than any other Latin American country.

The coronavirus-induced crisis is predicted to push millions of Mexicans into poverty, and human rights activists have warned that the pandemic has already deepened inequality.

Investment bank Goldman Sachs said in a note to clients that the federal government’s “underwhelming” fiscal response to the coronavirus crisis does not bode well for a strong economic recovery in the short term.

“The weak fiscal policy response to the pandemic … is likely to lead to a deeper contraction and a shallower recovery.”

Source: El Economista (sp)