Mexico’s economy contracts 6.2 percent in third quarter

MEXICO CITY - Mexico’s gross domestic product fell by 6.2 percent in the third quarter relative to the same period of 2008, beating analysts’ expectations, authorities said.

Inegi statistics institute said Friday that, excluding seasonal factors, the country’s GDP rose 2.93 percent in the July-September period compared to the previous quarter, indicating an end to the recession.

On a year-on-year basis, services fell by 6.5 percent, industrial production was down 6.6 percent and “primary” activities (agriculture and livestock) were off by 1.1 percent.

But on a quarter-on-quarter, seasonally adjusted basis, industrial production rose 2.14 percent relative to the second quarter, while services rose four percent and agricultural and livestock production declined 2.56 percent.

Analysts last month had forecast a decline of 6.7 percent in the third quarter, a 3.5 percent drop in the fourth and a 7.2 percent contraction for all of 2009.

Accumulated GDP fell 8.1 percent in the first nine months of the year, product of a drop of 9.3 percent in industrial production, an eight percent drop-off in services and a slight rise of 0.9 percent in the primary sector.

The Mexican economy began shrinking at the end of 2008, with a 1.6 percent drop in gross domestic product in the fourth quarter.

The GDP decline continued in the first two quarters of this year, falling 8.2 percent and 10.2 percent, respectively.

Mexico, which has been hammered by a drop in exports to the US and lower remittances amid the global financial crisis, as well as a worrying decline in oil production and oil-export revenues due to insufficient investment in that sector, is trying to retain the investment-grade credit rating it has enjoyed throughout this decade.

President Felipe Calderon earlier this month announced that third-quarter GDP had risen relative to the second quarter and that therefore Mexico had climbed out of its worst recession in decades.

“This result is very good news because it indicates the end of the recession, of the economic contraction in the country and we’re working hard so this recovery continues and broadens in the coming years,” Calderon said Nov 5.

–EFE