Mexican economy stagnates in second quarter

Mexico City (AFP) – Mexico registered zero economic growth in the second quarter, according to revised data released Friday, meaning that Latin America’s second-biggest economy dodged a recession even more narrowly than previously thought.

“Gross domestic product (GDP)… registered no change in real terms in the second quarter of 2019,” Mexico’s official statistics institute, INEGI, said in a statement — the latest bleak news for the world economy.

INEGI had initially said in July that Mexican GDP expanded by 0.1 percent in the period from April to June.

That puny-but-positive figure at least indicated the economy had returned to growth, after shrinking in the first quarter of the year.

Friday’s revised figure, on the other hand, shows that GDP in fact stagnated in the second quarter — a bad sign for Mexico and President Andres Manuel Lopez Obrador, an anti-establishment leftist who took office in December promising to kickstart the economy and “transform” the country.

He has not gotten off to an encouraging start, at least on the economy: it shrank by 0.2 percent in the first quarter, raising the specter of a recession — two or more consecutive quarters of economic contraction — just months into his term.

Mexico, whose economy is second only to Brazil’s in size in Latin America, is just the latest trouble spot on the global map.

With the United States and China locked in a trade war, US data flashing warning lights of a looming recession and Brexit mired in chaos, among other troubling signs, the “R” word is increasingly on people’s lips.

INEGI said Mexican industrial activity, which represents nearly one-third of the economy, contracted by 0.2 percent, while the primary sector — farming, mining and production of other raw goods — contracted by 3.4 percent.

The services sector and related activities, which represent around 60 percent of the economy, grew by 0.2 percent, INEGI said.

Mexico’s central bank cut its key interest rate by a quarter-point on August 15, to eight percent, a move aimed at boosting economic growth.

It was the first rate cut since 2014 for the normally hawkish central bank.

Lopez Obrador has vowed to deliver economic growth of two percent this year, and an average of four percent across his six-year term.

“My view hasn’t changed: we’re doing very well. I don’t see things the same way the experts do,” Lopez Obrador told a press conference.

“I feel that, thanks to everything we’re doing, there’s a better distribution of wealth (in Mexico), and that’s creating economic development and quality of life.”