Mexican economy continues to shrink

The swine flu outbreak and a decline in exports to the U.S. led Mexican officials last May to declare the country in recession. Later it was revealed that Mexico’s first quarter GDP dropped by over 8% though some analysts believed that the worst was yet to come. Their predictions, unfortunately, have come true:

Mexico's economy plunged 10.3 percent in the second quarter, its deepest contraction on record as withering exports forced factories to slash production and cut jobs.

The year-on-year decline in gross domestic product reported by the national statistics agency on Thursday was the deepest decrease in quarterly GDP in records dating to 1981.

With a downturn in the United States choking off demand for its manufacturing goods, Mexico is on track for its most severe recession since the 1930s. The economy is expected to shrink about 7 percent this year.

The silver lining to Mexico’s current economic woes is that it has not been accompanied by the high inflation, devaluated peso, and banking pitfall’s of 1995’s “Tequila Crisis.” A few economists even believe that Mexico’s economy will slowly recover despite the negative statistics. Nevertheless, today’s news does not bode well for a region that is trying to weather the global economic maelstrom.

Image- BBC News
Online Sources- The Latin Americanist, Reuters, Forbes.com, Bloomberg