LatinNews Daily - 04 May 2021

In brief: Mexico’s GDP contracts in the first quarter

* Mexico’s national statistics institute (Inegi) has released preliminary figures which show that the country’s GDP contracted by 3.8% year-on-year in the first quarter of 2021. Although negative, the figure is better than what analysts had anticipated, and has sparked optimism that Mexico’s economy is recovering. An Inegi report attributed the fall in GDP to the second wave of the coronavirus (Covid-19) pandemic that hit Mexico in the first quarter and led to the suspension of non-essential activities in parts of the country that negatively impacted the national economy. This latest fall in GDP means that the Mexican economy has contracted in year-on-year terms for the sixth consecutive quarter, and has regressed back to where it was in 2016. However, the Inegi data also shows that there was a marginal 0.4% increase in GDP in the first quarter compared with the fourth quarter of 2020, suggesting that the recession has bottomed out. Notably, following the release of the latest data, economists polled by Mexico’s central bank (Banxico) increased their GDP growth forecast for 2021 from the previous projection of 4.53% to 4.76%.