Secondary activities registered an annual fall of 10.2% and tertiary activities of 7.9%, which offset the rise of 1.6% presented by primary activities.
In 2020, the Gross Domestic Product (GDP) of Mexico registered the largest contraction since 1932, confirming a drop of 8.5% in the year of the pandemic, revealed by the National Institute of Statistics and Geography (Inegi).
This is a contraction as deep as the one estimated at the end of January by the same institute; it goes down in history as the second most acute after 1932 when the economy collapsed 14%; it clearly exceeds that reached in 2009, which was 5.3% and that registered in 1995, when the GDP contracted 6.9 percent.
The final GDP data with seasonally adjusted figures, thus confirms that the Mexican economy spun two consecutive years in contraction (in 2019 the fall was 0.1%), deepened by the unprecedented shock of the pandemic.
To get an idea of the size of the gap that has been generated with this biennial collapse, it is enough to recall the closest precedents of the economy falling for two consecutive years: between 2001 and 2002, with performances of -0.4 and -0.3% respectively; and the negative double observed in 1982 and 1983, when the GDP contracted 0.01 and 4.36%, respectively.
The count of the damage left by the closure of the economy and the absence of support for small businesses can be seen in the depth of the collapse of economic activities, agreed with the director of the Institute for Industrial Development and Economic Growth (IDIC), José Luis de la Cruz and the Director of Economic Research at the Think Lab Saver, Luis Pérez Lezama.
By components, primary activities registered an advance of 1.65, which was offset by the performance of secondary activities, made up of industrial sectors, which showed an annual fall of 10.2 percent.
Meanwhile, tertiary companies, made up of the services sector, presented a less acute but equally unprecedented contraction of 7.9%, compared to the data for the same quarter of the previous year.
In the breakdown of the report, it is possible to identify the size of the collapse that social distancing meant in service sectors such as temporary accommodation and food and beverage preparation, which fell 43.6% at an annual rate; while that of leisure, cultural, sports and other recreational services collapsed 54% annually; or the one of transport, mail, and storage that had a collapse of 20.4 percent.
From Washington and London, investment strategists from the consultancies Frontier View and Pantheon Macroeconomics, warn that the GDP data in the last quarter show weakening of the broad rebound that was observed in the third quarter.
Andrés Abadía, senior economist for Latin America at Pantheon Macroeconomics took the GDP data for the third quarter, positive at 12.1%, and contrasted it with the 4.5% drop in the last quarter.
The magnitude of the rebound has dissipated and it is very likely that the confidence indicators, the weakness of consumer credit and the languor of the labor market, will motivate a modest recovery this year, which will not compensate for the size of last year’s decline.
Meanwhile, the strategist at the Frontier View business consultancy, Alejandro Valerio, explained that it is foreseeable that the industry and remittances will support a heterogeneous recovery.
A more resilient manufacturing sector can be observed with better expectations given the strong link it has with the export activity of the United States, he predicted.
He reviewed the quarterly trend of the behavior of this segment in 2020 and showed that it went from a collapse of 29.5% in the second quarter, to a more measured -7.1% in the third and a negative 0.4% in the last quarter.
The IDIC expert explained that even in the best scenario estimated by brokerages, from a statistical rebound in GDP to 5.5% this year, it is not enough to offset a drop of 8.5% in 2020.
“It is as if we have fallen into a hole 8.5 meters deep. As you can, you go up 5.5 meters, but you are still under the ground. If next year you go another two meters, you will not be able to step on solid ground either, ”he stated.