LatinNews Daily - 01 February 2022

In brief: Mexico posts consecutive quarterly GDP contraction

* Mexico’s national statistics institute (Inegi) has released its latest data on GDP, which shows that the economy contracted 0.1% in Q4 2021, as compared to the previous quarter. According to Inegi, activity in the tertiary sector (services) contracted by 0.7%, with activity in the secondary (manufacturing) and primary (agriculture) sectors up 0.4% and 0.3% respectively, compared to the previous quarter. This is Mexico’s second consecutive quarterly GDP contraction, prompting some analysts to suggest the country had entered a technical recession. In response, Jonathan Heath, the deputy governor of Mexico’s central bank (Banxico), tweeted that this was a “simplification” of the definition of a recession. “If there are two quarters in a row with negative GDP, it increases the possibility that there is a recession, but that is not enough by itself,” said Heath. “A recession has to comply with three requirements: depth [significance of contraction], duration [length of contraction], and spread [of contraction across sectors]. For now, we comply only with duration.” According to Inegi estimates, the Q4 results mean that GDP growth for 2021 will total 4.8%, below the 6.3% growth that the finance ministry (SHCP) had hoped for.

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