Mexico’s economy shrank 2.4% in the first quarter of the year compared to the same period of 2019, according to preliminary data published on Thursday.

The contraction is the worst since the third quarter of 2009 when the ongoing effects of the global financial crisis caused a year-over-year GDP decline of 5%.

The first-quarter seasonally adjusted data from the national statistics agency Inegi comes amid the worsening coronavirus outbreak in Mexico.

However, the federal government’s social distancing initiative didn’t start until March 23 and nonessential businesses were allowed to remain open until the end of that month, meaning that the main economic impact of the pandemic will not be reflected in official data until second-quarter figures are released.

The preliminary Inegi data shows that secondary activities including manufacturing declined 3.8% between January and March compared to the first quarter of 2019, while the services sector shrank by 1.4%. The primary sector of the economy, including agriculture and fishing, performed better, growing 1.2% compared to the first quarter of last year.

The overall annual contraction of the economy was 0.8% larger than the 1.6% reduction between the last quarter of 2019 and the first quarter of 2020. Inegi will publish a final estimate for the economy’s first-quarter performance on May 26.

The downturn in the first three months of the year comes after the economy contracted 0.1% in 2019, the first decline since 2009.

With many businesses currently closed and millions of Mexicans staying at home as much as possible to help limit the spread of Covid-19, the contraction is predicted to be much sharper this year.

The International Monetary Fund is predicting that GDP will decline by 6.6% in 2020 as a result of the “great lockdown” but some banks are forecasting that the economy will take an even bigger hit.

Citibanamex sees a 9% contraction this year while BBVA México said last week that the economy could shrink by up to 12%.

President López Obrador has been criticized for his economic response to the coronavirus crisis, with some analysts saying that his plan will hinder rather than help growth.

The president has said repeatedly that his administration will not increase public debt to support the economy amid the pandemic nor will it give tax breaks to large companies or bail them out should they face collapse.

Source: El Economista (sp)