Mexico Risks Recession as Second-Quarter GDP May Be Revised Down

(Bloomberg) -- Economists expect Mexico’s second-quarter gross domestic product to be revised slightly down on Friday, with some going as far as to predict a negative number that would mean Latin America’s second-largest economy slipped into technical recession this year.

The median estimate of economists in a Bloomberg survey is for the final GDP reading to show no growth from the previous quarter. That would mean a negative revision to the 0.1% expansion preliminarily reported July 31. The national statistics institute Inegi will release the final figure at 6am on Friday.

Whether Mexico dips into a slight recession or not, growth is slowing to a crawl during President Andres Manuel Lopez Obrador’s first year in office. While he’s promised to boost social spending, that’s running up against his pledge to end wastefulness in government, which has led to budget cuts and a slowdown in public spending. And halting the privatization of the energy sector has hurt investor confidence.

But it was the poor industrial production figure in June that caused some economists to lower their second quarter estimates. Output fell 2.9% from the year-earlier period, more than analysts had expected.

While the flat GDP expected by four of 14 economists wouldn’t send Mexico into recession, another three in the survey see contractions of between 0.1% and 0.2%. The rest see no revision to the preliminary 0.1% growth figure.

The median estimates may still change as more economists can enter their predictions on Thursday.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Walter Brandimarte

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