Mexico’s GDP Probably Shrank Most in Three Decades Last Quarter

By Jens Erik Gould

July 31 (Bloomberg) -- Mexico’s economy probably shrank the most in three decades last quarter as the global recession and the outbreak of swine flu curbed industrial output and fueled job losses, the finance ministry said.

Gross domestic product may have contracted 10.4 percent in the second quarter from a year earlier after declining 8.2 percent in the previous three months, the ministry said in an e- mailed report yesterday. The government is due to release last quarter’s GDP figures on Aug. 20.

“In the second quarter of 2009, the external environment continued to be adverse,” the ministry said. “The flu outbreak temporarily affected activity in several sectors and regions, particularly in those related to tourism and leisure.”

Mexican job losses have accelerated this year as the recession in the U.S., which buys about 80 percent of the nation’s exports, saps demand for products. The central bank said this week the economy will shrink in 2009 at almost double the pace it previously forecast, predicting a contraction of 6.5 percent to 7.5 percent.

A contraction of 10.4 percent in the three months to June 30 would be the biggest decline in GDP since at least 1980, according to Bloomberg quarterly data that starts from the first three months of 1981.

Industrial production plunged 12.1 percent in April and May from a year earlier, while formal jobs declined 4.1 percent in June compared with the same month in 2008, according to the ministry’s report. Mexico had a budget deficit of 94.6 billion pesos ($7.1 billion) in the first half of the year, it said.

Public revenue fell 7.8 percent in the first half of the year compared with the same period last year as oil and tax revenue dropped, the ministry’s report said.

To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net.