Mexican economy faces worst setback since the 1930s

Mexico City: Mexico's economy contracted 8.3 per cent in 2020 year-on-year, marking its worst setback since the 1930s largely due to the coronavirus pandemic and the related lockdowns, according to preliminary estimates published by the National Institute of Statistics and Geography (INEGI).

In the fourth quarter of 2020, Mexico's gross domestic product (GDP) fell 4.5 per cent year-on-year, a more moderate contraction than the 18.7 per cent decline in the second quarter of last year and the 8.6 per cent decline in the third quarter, when the pandemic impacted productive activities, according to the INEGI report published on Friday.

In 2019, Mexico's GDP fell 0.1 per cent, accumulating two years of contraction, reports Xinhua news agency.

Mexican industrial activity in 2020 plummeted by 10 per cent annually, while the services sector saw a 7.7 per cent drop. The two sectors contribute the most to the GDP.

The agricultural sector, which makes a minimal contribution to GDP, grew by 2 per cent last year, according to INEGI's preliminary estimate.

Seasonally adjusted figures show Mexico's GDP dropped 8.5 per cent in 2020, but expanded 3.1 per cent in the fourth quarter of last year compared to the previous quarter.

Productive activity practically came to a standstill in the first half of 2020, after the first Covid-19 case was detected in February.

Mexico relies heavily on the economy in the US, its northern neighbour and main trading partner, whose economy contracted 3.5 per cent in 2020, the biggest annual decline since 1946.

With 155,145 Covid-19 fatalities, Mexico currently accounts for the third highest death toll in the world after the US and Brazil.

The country has registered a total of 1,825,519 confirmed cases.