Nov 25 (Reuters) - Mexico's economy contracted 0.4 percent
in the third quarter, receding faster than previously thought as
services slumped and supply chain issues bit, challenging the
central bank as it juggles record inflation, a weak peso and
The number released on Thursday by official statistics
agency INEGI was an adjustment from previously published
preliminary data that showed a smaller 0.2% contraction in the
A Reuters poll forecast the final data would show activity
Global supply chain disruptions have weighed heavily on a
recovery in manufacturing, notably in carmaking https://www.reuters.com/business/autos-transportation/mexicos-auto-heartland-workers-struggle-chip-shortage-bites-2021-11-24,
while service sector activity slowed during the summer from a
resurgence in the coronavirus.
"Going forward, supply-chain frictions, cost-push pressures,
lingering policy uncertainty, and weak business confidence are
likely to weigh on the broad industrial sector," Goldman Sachs'
Alberto Ramos said in a research note.
Secondary activity, which includes factories, rose 0.3%,
less than the 0.7% print in preliminary data. Tertiary activity,
which includes services and transport, contracted nearly 1%, the
INEGI data showed https://www.inegi.org.mx/app/saladeprensa/noticia.html?id=6949.
However, Ramos predicted a recovery in coming quarters.
President Andres Manuel Lopez Obrador, asked about the
negative data, said Mexico would still hit the government's 6%
growth target this year.
He highlighted the 4.5% year-on-year growth number INEGI
reported on Thursday for the quarter.
The deeper dent to growth could quieten calls for the Banco
de Mexico, the country's central bank, to move more quickly to
control inflation with a bigger interest rate increase at its
next policy meeting in December.
Mexico's central bank has a single mandate, to fight
inflation, but often mentions economic growth in its policy
meeting notes. The bank is also grappling with uncertainty about
its next governor after Lopez Obrador ditched his first pick and
chose instead a lesser-known economist https://www.reuters.com/markets/currencies/leadership-shake-up-test-mexican-central-bank-inflation-soars-2021-11-24.
Lopez Obrador on Thursday defended the proposal, calling
Victoria Rodriguez, a deputy finance minister, an honest and
responsible professional who meets requirements for the post.
Banxico has slowly but steadily tightened rates in recent
months in a so-far unsuccessful fight against the pace of price
rises, which hit a 20-year record in the first half of November.
Mexico's peso is another consideration for the bank
and on Wednesday was at its weakest against the dollar since
(Reporting by Miguel Angel Gutierrez, Ricardo Figueroa and
Marion Giraldo; Writing by Frank Jack Daniel; Editing by Kirsten
Donovan and Diane Craft)