Buoyed by services and exports to the United States, the Mexican economy grew 1.5% in the second quarter of 2021 compared to the first quarter and 19.7% compared to the April-June period of 2020, preliminary data from the national statistics agency Inegi showed on Friday.
It was the fourth consecutive quarter of growth but the 1.5% seasonally adjusted expansion was 0.2% below the average forecast of 14 analysts surveyed by the news agency Reuters.
The near 20% annual expansion, the first year-on-year quarterly growth since the start of the pandemic, is the largest on record.
Much of the Mexican economy was shut down for most of the second quarter of last year as the result of a government-mandated suspension of nonessential activities due to the burgeoning coronavirus outbreak. GDP slumped 8.5% in 2020, the worst economic contraction since the Great Depression, as Covid-19 ravaged the economy.
Inegi data showed that secondary sector activities, including manufacturing, were up 28.2% in the April-June quarter compared to the same period of last year. Demand for Mexican-made cars and electronics in the United States drove the strong result.
Data also showed that tertiary activities, including trade and financial services, were up 17% annually in the second quarter, while primary activities, including agriculture and fishing, were up a more modest 6.8%. Domestic consumption was buoyed by record remittances sent home by Mexicans working abroad.
Quarter-on-quarter growth was 2.1% in the tertiary sector, 0.6% in the primary sector and 0.4% in the secondary sector, Inegi said.
Despite the second-quarter growth, GDP was still 3.6% below the level it achieved in the July-September quarter of 2019, said Gabriel Casillas, an economist at the bank Banorte. The economy was already contracting when the coronavirus hit Mexico in early 2020.
After last year’s steep recession there is plenty of scope for growth, although the third wave of the pandemic will likely dampen the recovery in the third and fourth quarters.
“We expect real GDP growth to reach 6% in 2021, but the recent deterioration of the Covid backdrop, high inflation and rising rates could slow down the envisaged recovery,” Goldman Sachs economist Alberto Ramos said in a note to clients.
He also said that growth in the second quarter was hampered by supply chain disruptions and a shortage of parts, including computer chips, for key industries.
Growth in the first quarter of 2021 was 0.8% compared to the previous three-month period but GDP declined 2.8% compared to the January-March period of 2020. Mexico announced its first confirmed Covid-19 case on February 28, 2020. The accumulated tally now stands at more than 2.8 million while the official Covid-19 death toll reached almost 240,000 on Thursday.