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Is Mexico Entering Into A Recession?

MEXICO CITY — The Mexican economy has gone through several significant changes since the current administration led by Andrés Manuel López Obrador took office more than a year ago — and some experts fear a recession. 

New figures show Mexico’s economy contracted by 0.1% in 2019 with the fall of four quarters consecutively, meeting some economists’ definition of a recession.

But Juan Carlos Orozco, head financial analyst with Grupo Reforma newspaper, explained the decline only indicates that the economy is stagnated, but far from a recession.

Orozco said the steady income and employment rates prove that Mexico is not falling into a recession, but impacted by external factors from the world’s economy and by the shrinking of foreign investment. This last issue was motivated in part by the uncertainty brought by the López Obrador administration.

The analyst said remittances, mostly from expatriates in the U.S., have provided stability, along with other sources of equilibrium in the Mexican economy. Orozco said the economy is stagnated as it has been adjusting to a new government with new policies. 

And like in the U.S. economy, Orozco warned that there’s a growing threat that could negatively affect the next quarter: a possible coronavirus pandemic.

Rodrigo Cervantes was KJZZ’s bureau chief in Mexico City from 2016 to 2021.