Mexico’s economy shrank by less than 8.9 percent in 2020 and will recover in the first quarter of 2021, President Andres Manuel Lopez Obrador said on Monday in his first daily press conference of the year.
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“Analysts had estimated that the economy was going to fall between 12 percent and 15 percent in the year, and that wasn’t the case. So far (initial readings indicate a drop of) 8.9 percent and I estimate it will be less (of a plunge) because in the last quarter there was already more economic growth,†said the head of state, popularly known as AMLO.
Besides the more than 1.44 million coronavirus cases and over 127,000 deaths attributed to COVID-19 in Mexico, the pandemic caused a 9.6 percent contraction in gross domestic product (GDP) in the first nine months of 2020 and the loss of nearly 1.1 million formal jobs.
Mexico’s GDP plunged by 8 percent in 2020 but will bounce back and grow at a 4.6 percent clip this year, according to the Finance and Public Credit Secretariat’s projections.
“The governor of Banco de Mexico (Mexico’s central bank) has just revealed that there are signs of a recovery of Mexico’s economy, and we agree with that. We have reason to affirm that the economy’s going to grow in these three months, in this first quarter,†AMLO said.
As he did in a New Year’s Day message, the president said Mexico had recovered nearly 600,000 formal jobs between August and September but then lost nearly 277,000 jobs in December.
He blamed those layoffs on subcontractors’ practice of removing employees from payrolls to avoid paying year-end bonuses and other benefits.
Lopez Obrador is backing a bill that would sharply reduce the subcontracting of personnel to third-party companies.
Despite the challenges of the coronavirus and outsourcing, Lopez Obrador predicted that by the end of March the country would have 20.5 million formal workers registered with the Mexican Social Security Institute (IMSS), or roughly the same number as before the pandemic.
“We’re already going to start recovering them in January because a rehiring of those same jobs will begin, and on top of that there will be economic growth that’s happening and will happen this year,†AMLO said.
Among other positive factors, he recalled that a 15 percent increase in the minimum wage was approved for this year and that the peso has stabilized at an exchange rate of around 20 per dollar.
The pandemic remains his administration’s primary concern, according to Lopez Obrador, who stressed the need for the 15 million Mexicans over the age of 60 to get vaccinated by the end of March.
“If we achieve that, we’re going to be quite far along in controlling the pandemic, which is the most difficult thing,†the president said. ■