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LatinNews Daily - 01 July 2019

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In brief: Mexico

* According to a recent report by the local private sector think-tank Centro de Estudios Económicos del Sector Privado (CEESP), the decrease in economic activity in Mexico is not temporary and poses a serious economic risk. Mexico's national statistics institute (Inegi) has reported that in the first quarter of 2019 GDP contracted 0.2%. CEESP’s report comes in direct contradiction to the tendency that exists amongst the government and many active sectors to attribute the current economic stagnation to merely temporary factors. The CEESP report argues that currently, insufficient investment and low productivity have slowed Mexico’s rate of economic growth. This has led and could lead to bigger macroeconomic problems such as decreased oil production, increased interest rates, and a much larger fiscal deficit. The report also argues that the tendency to paint the economic problems as temporary could lead to ‘’a vicious cycle of stagnation or recession’’ where there is no incentive to fix the problem.