The Mexican economy grows 1.5% in the second quarter of the year

Mellita Rosas attends the bottled water business where she works in Iztapalapa, Mexico City, on June 11, 2021.Teresa de Miguel

Driven by trade with the United States, the Mexican economy grew 1.5% in the second quarter of the year compared to the previous quarter, the National Institute of Statistics and Geography (Inegi) reported on Friday. Compared to the same quarter last year, the jump is 19.6%, which reflects the dramatic drop seen in 2020 due to confinements due to the covid-19 pandemic. Between April and June, the gross domestic product (GDP) accumulated about 17.6 trillion pesos, below the level seen before the pandemic struck.

"With this annual growth, a sequence of seven consecutive quarters of annual contractions in GDP was interrupted, which began in the second quarter of 2019," wrote Banco Base specialist Gabriela Siller in a report.

“Although the annual increase in GDP is good news, it must be taken in context because there is a risk of thinking that the Mexican economy is growing at an accelerated rate, when the reality is that it is only rebounding due to the fall in the previous year, caused by the pandemic and confinement, "he added.

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Trade balance data offer a window to the momentum behind growth in Mexico. Also according to Inegi, exports grew at an annual rate of 76.6% during the second quarter, the highest advance for the same period since it was registered, according to Banco Base. The US reported Thursday that its economy grew 1.6% compared to the previous quarter and 6.5% compared to the same quarter last year. The Federal Government in Mexico, as well as the central bank, have expressed the importance of the fiscal and economic stimulus that the United States implemented in the growth of Mexico.

However, data published on Friday suggest that Mexico, despite having eased confinements, has still not recovered its production to reach pre-pandemic levels. The GDP for the second quarter of the year is similar to that seen in the last quarter of 2016. The sector that recovered the most during this period was services, with a boost of 2.1. Primary activities, such as agriculture and livestock, grew 0.6% while secondary activities, such as manufacturing, grew 0.4% in relation to the previous quarter.

Mexico experienced its biggest economic decline since 1932 last year, with a contraction of 8.5% of GDP in 2020. The recovery has so far been uneven, with regions of the country tied to foreign trade recovering employment more quickly. "Some entities, dependent on the tertiary sector (commerce and services), are far from recovering their pre-pandemic economic activity," Julio Santaella, president of Inegi, said in his social media account, "this is the case of Quintana Roo and the City of Mexico, which registered annual contractions of 16.6% and 6% ”in its economic activity and during the first quarter of the year.

#ITAEE some entities, dependent on the tertiary sector (commerce and services), are far from recovering their pre-pandemic economic activity;

This is the case of #QuintanaRoo and #CDMX, which registered annual contractions of (-) 16.6% and (-) 6.9% y / y respectively in 2021-Q1.

pic.twitter.com/Zg8f1mh9JD

- Julio A. Santaella (@SantaellaJulio) July 29, 2021

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