Mexico's economy experienced its sharpest decline in almost 90 years

Mexico's economy experienced its sharpest decline in almost nine decades last year, although in the last quarter its recovery was greater than originally expected. This was stated at the end of this week by the Mexican statistical office INEGI, which published preliminary data. The gross domestic product (GDP) of the second largest economy in Latin America fell by 8.5% last year after adjusting for seasonal effects. The result is slightly better than expected by economists contacted by Reuters. They expected a decrease of 8.8%. Nevertheless, the decline is most pronounced since 1932, when the world struggled with a major economic crisis. In addition, the economy is facing difficulties earlier this year as the number of those infected with the new coronavirus starts to grow again. Last year, the Mexican economy experienced its biggest downturn in the first half of the year, when the government embarked on extensive quarantine measures. However, it recovered to a large extent in the second half of the year and achieved significant growth, especially in the fourth quarter. Between October and the end of December, the Mexican economy grew by 3.1% quarter on quarter, while analysts polled by Reuters expected growth of 2.8%. According to economist Nikhil Sanghani from Capital Economics, the data for the 4th quarter mean that Mexico was able to erase more than 70% of the losses from the first half of last year. "On the other hand, the current growth in the number of new cases of COVID-19 will stop the current recovery in the first quarter," he added.