UPDATE 2-The Mexican economy ended 2020 stronger than expected
(Add comments from central bank of Mexico, economist)
MEXICO CITY, Feb.25 (Reuters) – Mexico’s economy grew faster than expected in the fourth quarter as the country recovered from its largest economic contraction in nearly nine decades, official data showed Thursday.
National statistics agency INEGI said the economy grew 3.3% in the fourth quarter of 2020 from the previous three months, revising its preliminary estimate of Jan. 29 that gross domestic product (GDP) grew by 3.1%.
“With the 4Q2020 impression better than expected, we now expect real GDP growth to firm up to 4.5% in 2021, from 4.0% previously, with growth momentum biased towards 2H2021,” Goldman Sachs economist Alberto Ramos said in a note to clients.
The minutes of the Bank of Mexico’s last monetary policy meeting showed that the majority of its five board members believed the pace of economic recovery would be moderate.
A board member said that further restrictions on mobility in Mexico will weigh on the recovery, while another member noted that given expectations of greater fiscal stimulus in the United States, the external demand is expected to continue to be a major driver of Mexico’s recovery.
Yet another member predicted that the recovery will be heterogeneous, with a strong external sector but with consumption and investment below pre-pandemic levels.
Beaten by disruptions triggered by the coronavirus pandemic, the GDP of Latin America’s second-largest economy fell 8.5% in all of 2020 in seasonally adjusted terms, INEGI said, confirming its estimate. preliminary.
This is the biggest drop since 1932 during the Great Depression.
Compared with the same quarter a year earlier, the economy shrank 4.3% in the last three months of 2020, the statistics agency said. In seasonally adjusted terms, the economy contracted 4.5% year on year.
Meanwhile, the economy grew 0.1% in December from November and contracted 2.7% from December 2019, a separate INEGI report showed. (Reporting by Anthony Esposito; Editing by Alex Richardson and Alistair Bell)