Mexico’s GDP decreased 0.4% between July and September, its first fall since the 2009 crisis; which will bring unemployment, less income, and an eventual price increase
Mexico’s economy is already in recession and will close 2019 with 0.1% decrease in Gross Domestic Product (GDP); whose impact will bring the loss or cancellation of 350 thousand formal jobs and a deterioration in the income of families.
The director of the Institute for Industrial Development and Economic Growth (IDIC), José Luis de la Cruz, explained that such a scenario emerges from the appropriate GDP figures, published by the Inegi on Wednesday; and of the negative cycle that registers the productive activity since last March.
The National Institute of Statistics and Geography (Inegi) reported that the national economy, measured through the Gross Domestic Product (GDP), had an annual contraction of 0.4% at the end of the third quarter of the year, with seasonally adjusted figures; the first since the 2009 crisis.
“Two consecutive quarters of losses report the GDP in original figures: –0.8% in the second quarter and –0.4% in the third quarter of 2019, without seasonal adjustment,” Inegi reported
The federal agency indicated that between the second and third quarter of 2019, GDP barely advanced one tenth of a point; while from January to September the indicator stagnated, with a rate of 0.0%.
Faced with this scenario, the IDIC director explained that the signs of an economic recession are clear: “first, because – within the GDP – the industry fell 0.1% between the second and third quarters; with an annual fall of 1.8% at the end of last September.
“Second, because the services, commerce and tourism sector stagnated, with 0.0% in both periods; and third, because although agriculture advanced 3.5% and 5.3%, in quarterly and annual terms, a negative cycle in economic activity persists, since March, ”he warned.
RECESSION, UNEMPLOYMENT AND FAMILY INCOME
In an interview with Publimetro, De la Cruz explained that the recessive phase in the Mexican economy manifests itself directly in the loss or cancellation of jobs; as well as a consequent loss of income and purchasing power for families.
He indicated that for every tenth that GDP loses, between 30,000 and 40,000 jobs are created; while, by reducing the income and consumption of the population, the door opens for companies to cut, unemployment soars, sales stop and investments are canceled.
“Official figures show that Mexico is far from meeting the annual growth target of 2%, set by the federal government. In 2019, the economy would have a negative annual rate of 0.1%; and that will bring the loss of up to 350 thousand jobs.
“By 2020, the growth scenario points to a range of 0.2% to 1.2%; with an average of 0.7%. This, as long as the government signs a National Agreement with companies, which triggers private investment from 19.5% to 22% of GDP; because without investment there is no growth, ”he said.
RED SPOTLIGHTS IN INDUSTRY AND SERVICES
The economic recession would not only be occurring in Mexico, but also other countries such as Germany or Hong Kong. / Cuartoscuro
The coordinator of the Laboratory of Trade, Economy and Business Analysis (LACEN), Ignacio Martínez Cortés, said that the Mexican economy went from slowing down to contraction or decrease in its main economic engines, such as industry and services.
He indicated that, although the national recession will be official until the official figures add two consecutive quarters with a decrease, with seasonally adjusted figures, most of the industrial branches operate in negative territory and are practically in the recessive stage
“Twenty of the 28 productive branches of the industrial sector reported losses last August,” said Inegi.
He said that the fall in Gross Fixed Investment – or the expense that companies make in the renovation of machinery, equipment, and infrastructure necessary to produce – fell 9%; what speaks of a “deindustrialization of the country”.
While the stagnation of 0.0% reported by the Inegi in the services sector –through the appropriate GDP figures– speaks of a “decapitalization –or no expenditure– in technology”; elements that represent a red focus for growth and deepen stagnation.
The coordinator of LACEN said that, according to Inegi, at the end of last August the industrial sector reports the following setbacks:
- Manufactures: 0.5%.
- Construction: 2.9%.
- Specialized construction work: 20.4%.
- Mining: 3.2%
- Oil and gas extraction: 5.6.
- Manufacture of textile supplies: 8%.
- Clothing: 6.4%.
- Manufacture of machinery and equipment: 5.9%.
- Leather and leather products: 3.8%.
- Manufacture of accessories, electrical appliances and electrical power generation equipment: 5.3%
The Mazatlan Post