Monday, March 4, 2024

Economic activity plunged 20% in April; worst decline ever recorded

Coronavirus lockdown measures had a devastating effect on Mexico’s economy in April, new data shows.

The national statistics institute Inegi reported on Friday that economic activity declined 19.67% in April compared to the same month a year earlier. April was the first full month in which nationwide coronavirus restrictions were in force.

The contraction was the worst year-over-year decline since comparable economic records were first kept in 1993. The previous record was an 11% contraction registered during the global financial crisis in 2009.

Inegi said that activity in two of the three broad sectors of the economy declined in April.

Activity in the industrial sector dropped a record 29.6% compared to the same month last year, while the services sector registered a 16.6% decline, also a record.

The agricultural sector provided some brighter news amid the gloom, growing by 2.4%.

News of the April slump comes two days after the International Monetary Fund (IMF) downgraded its 2020 growth forecast for Mexico to a 10.5% contraction. According to the IMF’s June World Economic Outlook Update, Mexico will suffer a deeper recession this year than any other country in the Americas.

Carlos Capistran, a Bank of America economist in New York, said the data for April is consistent with the forecast that Mexico’s economy will contract by 10% or more this year.

“It is not only the result of Covid-19 and the lockdown, but the lack of vigorous policies to help the economy,” he said.

“The latter and a virus that is still on the loose in Mexico will continue to keep economic activity in contraction territory for many more months.”

Source: El Financiero (sp) 

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