The Day at a Glance | February 25 2021

The Top

· A (-) 8.5% contraction in the Mexican economy was confirmed during 2020; the 4Q20 showed recovery that exceeded estimates (3.3% quarterly; -4.5% annual).

· Rise in oil prices increases inflationary risks in emerging countries; Brazil and Nigeria could start to see interest rates increase.

· Katherine Tai, nominated by Biden to be US trade representative, will present her stance regarding China and other trade partners.

· Worldwide trade recovered pre-pandemic levels at the end of 2020: CPB.

· Economic indicators: Unemployment in Mexico increases to 4.5% in January; growth in the US was confirmed at an annualized 4.1% for the 4Q20.

Economic environment

Final INEGI figures confirmed the largest contraction in Mexico`s economy in almost a century in 2020. The revised data pointed to a (-) 8.5% contraction during all of 2020, with industrial activities being affected the most (-10.2%), followed by services (-7.9%); only primary activities saw growth during the year (2%). During the last quarter of 2020, recovery remained firm in Mexico, with growth above the estimated 3.3% (-4.5% was its annual comparison). The data reflects contraction at an annual rate in the economy during the last 5 quarters after the Mexican economy was already weak prior to the pandemic`s impacts. Among the most affected sectors, some that stand out are entertainment, recreational, cultural and sporting events (-54% in 2020), accommodation services (-43.6%), construction (-17%), and transportation, post and storage (-20.4%). A recovery between 4% and 5% is expected to be seen in 2021 for the Mexican economy, boosted by the United States recovery and the fiscal stimuli its carrying out. Moody`s, the international rating agency, published a report in which it adjusted its growth estimates for the Mexican economy in 2021 upwards from 3.4% to 5.5%. However, the rating agency warned that Mexico would not be able to take advantage of growth seen in the US in order to grow in the long term – given that the business environment in the country is highly likely to hinder new investments that will boost growth in the long run.