Mexico’s pandemic-hit economy shrank 8.5% in 2020, the largest single-year drop since 1932 and the second consecutive year of economic contraction.
Mexico’s gross domestic product grew 3.1% in the final three months of the year, according to preliminary data released Friday by the National Statistics and Geography Institute.
Growth in the second half of 2020 allowed Mexico to beat projections earlier in the year of a double-digit contraction. The second trimester of the year when the pandemic took hold and much economic activity was frozen saw a contraction of 18.7% compared to the same period a year earlier.
Unlike in many of the world’s largest economies, Mexico’s government did little to support businesses or subsidize consumers. President Andrés Manuel López Obrador refused to indebt the country to soften the blow.
“The 2020 economic plunge is the reflection of not only the devastating effects of the virus pandemic but also the lack of preparedness and insufficient policy response of the current administration,” Alfredo Coutiño, director of Moodys Analytics, wrote in his analysis Friday.
Part of the economy gradually began to open in June and the economy grew 12% in the third quarter, but remained 8.6% below the same period a year earlier. Much of the improvement had to do with U.S. economic activity picking up, Coutino said.
López Obrador conceded Friday that the country was still 800,000 jobs short of the employment levels before the pandemic, but he said that “there are encouraging signs in the economy.”
The Mexican economy was already in a recession before the pandemic struck.
“The government’s decision of not implementing a rescue package to support businesses and mitigate the loss of employment took a heavy toll in terms of business mortality and well-being deterioration,” Coutiño said. Mexico ended 2020 with 840,000 fewer jobs than it had in February before the pandemic hit.