The Mexican economy plummets 8.5% in 2020

Customers at the Central de Abastos of Mexico City.Nayeli Cruz

The biggest disaster in the Mexican economy in almost 90 years has been confirmed.

The National Institute of Statistics and Geography (Inegi) has announced that the Gross Domestic Product fell by 8.5% during 2020. The final figure of the debacle of the Mexican economy at the end of last year was equal to that estimated by the agency last January.

The effects of the pandemic have caused the second consecutive decline in Mexico's economy - in 2019 it fell 0.1% - and in the worst decline since the Great Depression.

Despite the negative annual balance, the Mexican economy reported a slight improvement in the last part of the year.

GDP during the last quarter of the year grew 3.3% compared to the previous months.

From October to December, the industry grew 3.9% and the services sector 3.2% while agricultural activities showed a decline of 2.4%.

Inegi data are in line with the latest estimates made by the International Monetary Fund (IMF), although it represents a greater drop than that estimated by the Ministry of Finance, which had predicted a decline for last year of 8%.

For 2021, the president of Mexico, Andrés Manuel López Obrador has projected a growth of 5% of the GDP, a more optimistic forecast than the 4.3% estimated by the IMF and the 3.7% projected by the World Bank.

In addition, the credit rating agency Moody's improved its forecast for Mexican GDP from 3.5% to 5.5%, in the context of strong demand for Mexican exports from the United States.

Parallel to the confirmation of one of the worst years for the Mexican economy, the first figures on employment this year are not encouraging either.

In January, the unemployment rate in Mexico stood at 4.7%, which represents an increase of 0.9 percentage points compared to the same month the previous year.

This means that 2.6 million people do not have a job, according to the National Survey of Occupation and Employment, published this Thursday, by Inegi.

The employed population stood at 52 million people in the first month of 2021.

Employed persons in the service sector fell by 2.7 million employees, while micro-businesses and small establishments reduced employment by 2.1 million people.

Informal employment in January 2021 amounted to 28.9 million, while the informal employment rate stood at 55.6%, 0.6 percentage points lower than in January last year.