By Anthony Harup
MEXICO CITY–Mexico’s economic activity contracted in the fourth quarter in a second consecutive decline, as weakness in services offset gains in industrial production and agricultural production.
Gross domestic product, a measure of the production of goods and services, fell 0.1% from the third quarter in seasonally adjusted terms, after contracting 0.4% in the previous quarter, it was reported on Monday. the National Institute of Statistics.
Services fell 0.7% from the third quarter, while industrial production rose 0.4% and agricultural production 0.3%.
In unadjusted terms, GDP increased by 1% compared to the fourth quarter of 2020 and increased by 4.8% for the whole of 2021.
The rebound from an 8.2% contraction in 2020 lost momentum in the second half of the year as services were held back by mobility restrictions in the third quarter during a spike in Covid infections, the slowdown in construction activity and supply chain bottlenecks that have plagued a number of industries, including the automotive sector.
Services were also negatively affected by labor law changes that ban the outsourcing of staff, although the change had little to no effect on overall employment which has returned to levels before the pandemic.
The slowdown came as inflation hit a 20-year high, prompting the Bank of Mexico to raise interest rates five times between June and December, raising the target for the overnight rate to 5 .5% versus 4%.
Write to Anthony Harrup at anthony.harrup@wsj.com
