Mexican President Andres Manuel Lopez Obrador has promised four percent economic growth
(Pedro PARDO)

Mexico City (AFP) – Mexico, Latin America’s second-largest economy, registered a surprise 0.2-percent drop in GDP in the first quarter, according to official statistics released Tuesday — worrying news for President Andres Manuel Lopez Obrador.

It was the first full quarter under Lopez Obrador, an anti-establishment leftist who is promising economic growth of four percent per year during his six-year term, but whose policies have unsettled the business world and created a climate of uncertainty.

Lopez Obrador, widely known as AMLO, has alarmed investors since taking office on December 1 by vowing to transform Mexico’s “neoliberal” economic model and cancelling a new $13-billion airport for Mexico City that was already one-third complete.

Mexico posted tepid economic growth of 0.2 percent in the fourth quarter, closing out 2018 with growth of 1.7 percent on the year.

Analysts polled by Mexico’s central bank cut their growth forecast for 2019 earlier this month, from 1.8 percent to 1.5 percent.

The economy was dragged down in the first quarter by the industrial sector, which registered a 0.6-percent contraction, and the services sector, which shrank by 0.2 percent, said national statistics institute INEGI.

Together, the two sectors represent around 90 percent of the Mexican economy.

The report “made for ugly reading,” said London-based consultancy Capital Economics, which called the preliminary data “dire.”

It said the contraction in the services sector was particularly troubling.

“This sector, which accounts for 65 percent of the economy, has been the one bright spot in an otherwise moribund economy over the past 12 to 18 months,” it said in a note.

Revised economic growth data for the quarter will be published on May 24.

Lopez Obrador won a landslide victory in Mexico’s 2018 elections, promising radical change.

But the economy threatens to be his Achilles’ heel. His year got off to a rough start, with a series of strikes affecting railroads and factories, and gasoline shortages caused by his government’s decision to shut down fuel pipelines in response to rampant theft.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.