Mexico’s post-pandemic economic recovery is losing strength after rallying in June, the U.S.-based Fitch Ratings agency warned on Wednesday, Oct. 14.
“The latest data for Mexico suggest that the pace of economic recovery is slowing after a sharp rebound in June,” the agency said in a brief commentary.
While “robust incoming data” in June and July pointed to higher than 6.5 percent growth in the third quarter of 2020 compared to the previous quarter, “there are clear signs that momentum is slowing,” the agency said.
“Manufacturing output grew by a meager 0.8 percent month-on-month in August, after a strong pick-up in the previous two months, suggesting that most of the rebound has passed,” the agency said, adding “survey indicators were still in contraction territory” throughout the third quarter, “pointing to a deceleration ahead.”
The services sector showed “the same pattern” and the labor market faces a challenging outlook, with major employers, such as the hospitality and tourism sectors, “still performing at much lower levels” than before the pandemic, Fitch said.
“High unemployment, ongoing uncertainty regarding the evolution of coronavirus cases and slow re-opening of the economy are dampening confidence and hampering private consumption,” the statement continued.
The one bright spot was Mexico’s trade exchange, which was being driven to “a record-high trade surplus” thanks to a drop in imports. along with a “rapid pick-up in exports driven by a rebound in the U.S. manufacturing sector,” it said.
…Oct. 16, 2020