2020 has been quite the ride for the whole world. Ever since the turn of the year, it seemed like there would be a new surprise each week. While the whole world went through ups and downs, let’s take a moment to focus on how resilient the Mexican Economy is in this economic retrospective 2020.
A rocky road with a bright light at the end of the tunnel
Mexico is a great example of how to be resilient. 2020 was hard, but we kept moving forward.
At the start of the year, the Mexican economy was facing some challenges. 2019 was the first year in a decade that the economy saw a contraction. It receded merely 0.1%, but it had been since 2009 that Mexico faced anything similar.
“The economy might have hit rock bottom by the end of the fourth quarter,” stated Edward Moya, OANDA market analyst.
According to an INEGI January report, Mexico’s GDP receded 0.1% compared to 2018, it was 0.4% when comparing only Q4. By the end of the year the Mexican industry stuttered 1.8%, but agricultural activities increased by 2%.
The year was only starting, a couple of months in and the whole world was in for a treat.
The pandemic hit the entire world hard, and we all stood together
COVID-19 had the whole world in lockdown, thus affecting every single country’s economy. Mexico was no exception. The world economy fell 3% and some countries had it harder midway 2020. The Mexican economy receded 17.3% between April and June, all due to the pandemic.
As the world went in lockdown, the industry stood still. Industrial activity in Mexico receded 23.6% due to manufacturing lines shutting down, a phenomenon that could be seen worldwide.
“We knew this data would show up because we are measuring April, May, and June, the worst months of all. We hit rock bottom in April and May, it can be measured by the employment loss,” stated Andres Manuel López Obrador, President of Mexico.
According to the Mexican Social Security Institute (IMSS), Mexico sadly lost nearly 900,000 jobs just in the months of April and May.
“The economy is frozen,” added the President of Mexico.
Nonetheless, as the world slowly got better on dealing with the pandemic, so did Mexico.
Economic recovery and foreign investment explosion
After the Mexican economy went through its worse due to COVID-19, everything started to bounce back. According to INEGI, the Mexican GDP grew 12% between July and September. This was reflected in the industrial and manufacturing sector with a growth of 21.7%, an 8.8% in the services sector, and an 8% in primary activities.
“This economic rebound has been driven by a strong recovery in external demand,” informed the Mexican Central Bank.
“(Our economy) is growing now. Our economy is recovering, our forecast that we were going to fall due to the pandemic but that we were going to recover soon is coming true,” stated the President of Mexico.
Furthermore, foreign investment had a great recovery in the third quarter. The Bajio Region alone received millions of dollars in foreign direct investment aimed towards technology and communications. Brazilian data center giant, ODATA, was part of that recovery as it invested over $100 million USD in Queretaro to enter the North American market.
If there is something we can take from 2020 is that the Mexican economy is strong and resilient. The year might not have started as we wanted, and got tougher midway, but by the end of the third quarter it was back on its feet. One thing is clear, we will receive 2021 with open arms and great hope.
There is a clear advantage in settling in a country where the economy can recover so great. It is a sign of prosperity that would benefit any company. Thus, here at VYNMSA we would like to assist you in settling in Mexico.
We are one of the leading industrial real estate developers in Mexico. Plus, we have over 25 years of experience and have delivered over 400 projects to fully satisfied customers. We are also fully equipped to assist you in developing your BTS projects. All while offering lease and sale solutions that always have a win-win approach.
Contact us and set shop in Mexico with VYNMSA and enjoy the benefits of being part of the resilient Mexican economy.