The economic activity in Mexico showed a change of direction in the holiday season, after registering growth since last March, in annual comparison, according to data revealed this Tuesday by the National Institute of Statistics and Geography (Inegi).
The Timely Indicator of Economic Activity (IOAE), which tries to give an advance forecast of the Global Indicator of Economic Activity (IGAE), showed in the last month of 2021, a contraction of 0.2% compared to the same month of 2020.
“The annual comparison was going to be difficult in December. The country had already entered a slowdown phase in the second half of 2021. The issue of contagion due to the Delta variant, the adjustments due to the outsourcing reform, as well as the breakdown of global value chains and the basis of comparison affected the result for the last month of 2021”, explained James Salazar, deputy director of Economic Analysis at CIBanco.
According to Inegi estimates, in the worst scenario the economy could contract up to 2.0% annually in December while, on the other hand, growth could be up to 1.5 percent.
“The last few months have brought about an important change in conditions for economic events. The rise in interest rates, the accumulated wear and tear on consumption, and the uncertainty on the health, political, and economic fronts contribute to a more challenging growth outlook,” said Marcos Daniel Arias, an analyst at Monex.
In a monthly comparison, the Mexican economy would not have presented any change compared to November 2021.
services fall
Tertiary activities, where the service sector is included, would be one of the main reasons why economic activity would show a contraction last December, this due to the affectation by the changes in labor matters that companies had to go through.
The IOAE released the estimate that, for the last month of the year, services would have presented an annual decline of 1.3%, the biggest drop since February 2021, when they contracted 5.0 percent.
“ The performance (of services) in December would have been stagnant (growth of 0.1% per month), although the annual rate of -1.3% reflects that, after the inertial rebound after the closure of activities, 2021 has been a year of deterioration rather than recovery”, highlighted the Monex analyst.
The services sector was one of the most affected during the first year of the Covid-19 pandemic, in particular those related to tourism and accommodation, due to the confinement measures implemented by the government to reduce contagion.
Industries lose momentum
Regarding secondary activities, the IOAE showed that by the end of 2021, they would have lost the momentum registered in past months, as they presented lower growth rates. In December, the industrial sector would have shown a growth of 0.4%, the lowest rate so far this year.
In monthly comparison, it showed a contraction of 0.2 percent.
“The behavior that would be observed in the month would be related to the rapid spread of the Ómicron variant through a marked weakness in the supply of labor and greater caution on the part of consumers,” Monex reported.
At the end of December, the Omicron variant was discovered in various parts of the province of South Africa and quickly began to spread to the rest of the world. In Mexico, the so-called fourth wave of infections began in 2022, which has even exceeded the daily infections registered by the Delta variant.
ana.martinez@eleconomista.mx