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Mexican economy suffers first contraction in a decade in 2019

by Reuters
Thursday, 30 January 2020 12:56 GMT

(Updates with details)

MEXICO CITY, Jan 30 (Reuters) - Mexico's economy shrank for the first time in a decade last year, data showed on Thursday, as businesses reined in investment due to uncertainty over the economic policies of President Andres Manuel Lopez Obrador.

Adjusted for seasonal swings, Latin America's no. 2 economy contracted by 0.1% in 2019 after growth of just over 2% the previous year, according to a preliminary estimate published by national statistics office INEGI.

Gross domestic product (GDP) was unchanged during the fourth quarter compared to the previous three months, INEGI said.

That was slightly better than the consensus forecast in a Reuters poll for a contraction of 0.1%.

Mexico's economy struggled during the first year in office of Lopez Obrador, a leftist who promised to root out corruption and chronic inequality when he took office in December 2018.

Foreign investment has held firm in Mexico under his government, but domestic businesses have been more wary.

Gross fixed capital investment fell by 5.2% on the year during the first ten months of 2019, according to figures published by INEGI earlier this month.

Lopez Obrador's decision to cancel a partly built, $13 billion new airport for Mexico City, and his retreat from the prior government's liberalization of the oil and gas industry, have stirred concern about his economic stewardship.

The president argues the airport project was tainted by corruption, but business leaders were incensed by the decision.

The economy stagnated in the July-September period quarter-on-quarter and shrank by a tenth of a percentage point in each of the three prior quarters, the latest data show. (Reporting by Dave Graham Editing by Miguel Gutierrez, Chizu Nomiyama and John Stonestreet)

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