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Mexico’s economy suffers worst slump since 1930s

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MEXICO CITY: Mexico’s economy last year suffered its biggest annual contraction since the 1930s, although it recovered better than expected from the ravages of the Covid-19 pandemic during the final quarter, data showed.


Gross domestic product in Latin America’s second-biggest economy tumbled by 8.5 per cent last year in seasonally adjusted terms, according to the estimate issued by national statistics agency INEGI.


The fall was slightly shallower than the consensus forecast in a Reuters poll for an 8.8 per cent decline.


Still, the contraction was the sharpest since 1932 during the Great Depression, data published by the National Autonomous University of Mexico (UNAM) show.


During the second half of 2020, the economy made up much of the ground lost to the pandemic, and an unexpectedly robust performance in the October-December period helped lift the peso against the dollar early on Friday.


But the economy remains a major challenge for President Andres Manuel Lopez Obrador, whose efforts to strengthen the state’s hand in the energy market have led to disputes with businesses and upset Mexico’s allies, chilling investment.


The second quarter bore the brunt of economic disruptions caused by the pandemic, before a sharp increase in infections towards the end of 2020 led to renewed commercial restrictions in Mexico City area. — Reuters


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