Mexico's Economic Activity Contracted 8.2% in 2020

MEXICO CITY -- Mexico's economic output shrank 8.2% in 2020, its sharpest decline in almost nine decades as restrictions to slow the spread of the coronavirus shut down many industries and services early in the year.

The recovery begun in the third quar

ter continued in the fourth, with gross domestic product expanding 3.3% in seasonally adjusted terms from the previous quarter, revised data from the National Statistics Institute showed Thursday.

The fourth-quarter increase was above the 3.1% preliminary estimate at the end of January. Industrial production rose 3.9% from the third quarter, and services expanded 3.2%.

The 8.2% drop in output for the full year followed a 0.1% contraction in 2019, and was the sharpest decline since 1932 when GDP is estimated to have decreased 14.8% amid the Great Depression.

The second-half recovery is widely expected to continue in 2021, although it could take several years for activity to return to 2019 levels, economists estimate.

Moody's Investors Service this week raised its forecast for Mexican growth to 5.5% from 3.5%, citing a better-than- expected fourth quarter in Mexico and expectations of a strong rebound in the U.S. economy that should drive demand for Mexican exports.

"While higher real GDP growth rates in 2021-22 imply a steeper economic rebound compared to our previous forecasts, output will not reach its 2019 level before the end of 2022," the ratings firm said in a report.

Economists polled this week by Citibanamex forecast 2021 GDP growth of 3.9%.

Write to Anthony Harrup at anthony.harrup@wsj.com

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  02-25-21 0741ET
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