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Problems in the supply chain, inflation and the pandemic are among the causes of the contraction in the third quarter of 2021, reported by the National Institute of Statistics and Geography. Added to this is the nervousness in the markets caused by the change in the nomination for governor of the Central Bank.
‘Do not panic’. Although the Mexican economy contracted 0.4% in the third quarter, Mexican President Andrés Manuel López Obrador promised that economic growth at the end of the year will exceed 6%, driven by foreign investment and employment rates.
Data from the National Institute of Statistics and Geography exceed the previous forecast of 0.2% and among the causes of the slowdown are global interruptions in the supply chain, as well as the rebound in Covid-19 infections that the Aztec country faced in August and a new law that could eliminate outsourcing.
The data comes a day after the Mexican peso fell, when nervousness took hold of the markets when the change in the central bank’s governor’s nomination occurred. The candidate would be Victoria Rodríguez Ceja, Undersecretary of Finance Expenditures, instead of the former head of the Ministry of Finance and Public Credit (SHCP), Arturo Herrera, who had been nominated since June.
The economic results of the third quarter were 4.7% higher than those of the same quarter of the previous year, when the economy was contracted by the blow of the pandemic.
Disruptions to the global supply chain dragged down the recovery in the manufacturing sector, especially in car manufacturing, while the service sector slowed due to the resurgence of the coronavirus.
“Going forward, supply chain frictions, cost pressures, lingering political uncertainty and weak business confidence will likely weigh on the industrial sector as a whole,” said Alberto Ramos of Goldman Sachs.
Also, some temporary closures affected wages for thousands of workers in Mexico due to suspensions and layoffs, according to Reuters in interviews with workers, union leaders and industry executives.
Banxico, as the Central Bank of Mexico is known, increased interest rates, albeit timidly, but steadily in recent months, in an attempt to control inflation, which is at 20-year highs.
With Reuters and AP
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