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Inegi confirms collapse of the Mexican economy of 18.7% in the second quarter

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La Mexican economy registered an annual fall of 18.7% in real terms and with seasonally adjusted figures in the second quarter of the year of the Great Lockdown, reported the National Institute of Statistics and Geography (Inegi).

With revised figures for the Gross Domestic Product (TAX ID No), remains in the historical record as the sharpest drop in economic activity in a second quarter, a consequence of social distancing measures and voluntary closure of businesses to limit the speed of the contagion by Covid-19.

The contraction of GDP in the second quarter of the year was two tenths lower than the timely estimate of Inegi itself released 20 days ago, when it projected that the collapse would be at a historic 18.9 percent.

The president of Inegi, Julio Santaella, posted on his Twitter account @SantaellaJulio that “to put in historical context the contraction of Mexico's GDP during the 2020-Q2 confinement (-17.1% q/q) we must go back 10 years to observe the same level of product”

Strategists from the consultancy Pantheon Macroeconomics and Bank of America Securities, specify that the depth of the collapse is also explained by the absence of a solid countercyclical fiscal policy and by the weakness that the Mexican economy was already dragging due to domestic decisions that have discouraged investor and consumer confidence.

The collapse of economic activity in the second quarter exceeds the declines of the second quarter of 1995 (-8.6%) and the same period of 2009 (-7.7 percent).

In its quarterly comparison, this is with respect to the performance in the first quarter of the year, the drop was 17.1% in the April-July period, thus accumulating five consecutive quarters of contraction.

Leisure and accommodation services lead the impact

In the disaggregation of the information, the Inegi showed the collapse of all economic activities, led by the services sector.

According to their data, in the second quarter of the year there was a drop of 25.7% in secondary activities, this in your annual record.

In this segment there are activities such as mining; generation, transmission and distribution of electrical energy, water and gas supply, construction and manufacturing industries, which together and under normal conditions, contribute 31.6% of GDP, according to Barclays estimates.

In the disaggregation it is observed that The most affected sectors were leisure and cultural services (-46.7%) as well as accommodation and food preparation (39.6 percent).

Trade and transportation, also down

Meanwhile, tertiary activities completed a historic collapse of 16.2 percent.

This segment includes commerce, transportation, mail and storage, information in mass media, financial and insurance services, professional and scientific services, rental of goods, furniture and intangibles, educational, leisure and cultural services, as well as legislative activities.

And finally the primary activities, which had been the only ones with a positive record in the previous quarters, were dragged until reaching a collapse of 0.2% in the annual comparison.

Agriculture, animal husbandry and exploitation, forestry, fishing and hunting activities are gathered here.

One-semester crash

The final GDP data for the second quarter of 2020 means that the annual contraction for the first half of the year was -10.4% with seasonally adjusted series.

Just like the second quarter data, the semi-annual collapse is historic for a similar period since records have been recorded. During the first part of the year the secondary activities recorded a drop of 14.4% compared to the same period of the previous year, with seasonally adjusted figures.

While the tertiary services reached the second largest collapse, of 8.7% also between January and June in their annual comparison.

And the primaries were the only ones that avoided the fall but for a minimal positive performance in the semester of 0.1 percent.

El GDP collapse In the semester, it greatly surpassed the historic -6.69% of 2009 and that of 1995, when the economy completed a fall of 5.30 percent.

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Jorge Camargo
Currency / Currency
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