Mexico's economic recovery likely ran out of gas in first quarter

MEXICO CITY: Mexico's economy likely slowed and grew only marginally during the first quarter of the year due to the impact of the coronavirus pandemic and energy shortages in February, a Reuters poll showed on Wednesday.

Gross domestic product (GDP) is expected to have expanded 0.1% in seasonally-adjusted terms in the first quarter of the year, according to a median forecast of a poll of 13 analysts, after growing 3.3% in the final three months of 2020.

Hammered by the restrictions brought about by the pandemic, Latin America's second-largest economy shrank 8.5% in 2020, its worst performance since 1932 during the Great Depression.

Those polled expect the economy declined 3.5% year-on-year in the first quarter in non-adjusted terms, after shrinking 4.3% in the previous quarter. If the projection materializes, it would be the sixth consecutive quarter of year-on-year economic decline.

In the first few weeks of this year, Mexican authorities placed restrictions on social movement in several parts of the country, including the capital Mexico City, to reduce the latest flare up in cases.

Economic activity also took a hit in February when a spell of unusually cold weather in the United States, especially Texas, led to gas shortages in Mexico that forced temporary shutdowns of Mexican factories.

Mexico's economy contracted 5.1% in February versus the same month last year, mainly driven by weakness in the manufacturing and service sectors, official data showed.

Mexican central bank board member Jonathan Heath on Monday said the data points to a stalled economic recovery.

Mexico's national statistics agency INEGI is due to publish the latest economic growth figures on Friday.