Report: Mexican economy shrinks 8.5% in 2020

Mexico’s pandemic-hit economy shrank 8.5% in 2020

MEXICO CITY -- Mexico’s pandemic-hit economy shrank 8.5% in 2020, the largest single-year drop since 1932 and the second consecutive year of economic contraction.

Mexico’s gross domestic product grew 3.1% in the final three months of the year, according to preliminary data released Friday by the National Statistics and Geography Institute.

“The 2020 economic plunge is the reflection of not only the devastating effects of the virus pandemic but also the lack of preparedness and insufficient policy response of the current administration,” Alfredo Coutiño, director of Moodys Analytics, wrote in his analysis Friday.

Part of the economy gradually began to open in June and the economy grew 12% in the third quarter, but remained 8.6% below the same period a year earlier. Much of the improvement had to do with U.S. economic activity picking up, Coutino said.

López Obrador conceded Friday that the country was still 800,000 jobs short of the employment levels before the pandemic, but he said that “there are encouraging signs in the economy.”

The Mexican economy was already in a recession before the pandemic struck.

“The government’s decision of not implementing a rescue package to support businesses and mitigate the loss of employment took a heavy toll in terms of business mortality and well-being deterioration,” Coutiño said. Mexico ended 2020 with 840,000 fewer jobs than it had in February before the pandemic hit.