By Pedro da Costa and Jason Lange
MEXICO CITY, Aug 20 (Reuters) - Mexico's economy plunged 10.3 percent in the second quarter, its deepest contraction on record as withering exports forced factories to slash production and cut jobs.
The year-on-year decline in gross domestic product reported by the national statistics agency on Thursday was the deepest decrease in quarterly GDP in records dating to 1981.
With a downturn in the United States choking off demand for its manufacturing goods, Mexico is on track for its most severe recession since the 1930s. The economy is expected to shrink about 7 percent this year.
'Exports have declined very sharply and we do not see yet a reaction to the slow improvement in economic activity in the United States,' said Claudio Loser, president of Centennial Group Latin America and a former senior International Monetary Fund official.
Compared with the first quarter, Mexican GDP fell 1.12 percent, compounding a recession that has wiped out hundreds of thousands of manufacturing jobs. Some 80 percent of Mexican exports, including cars and televisions, go to the United States.
A severe bout of the H1N1 influenza virus made matters worse, hurting the country's key tourism industry and other services.
'Things are really tough right now,' said Karla Grijalva, 22, who was laid off from her job as a secretary six months ago and has yet to find work.
LESS BAD, NOT YET BETTER
To be sure, there have been some signs of recovery in both Mexico and America.
In the United States, the battered housing sector is showing signs of bottoming out, and manufacturing surveys have been ticking steadily higher.
In Mexico, industrial output is deteriorating at a less drastic clip and consumer sentiment has edged higher from a record low in May.
A separate report released on Thursday showed the economy sank 8.08 percent in June from a year earlier, a more moderate decline than during the prior two months.
'I expect Mexico's economy to stabilize by the fourth quarter and begin growing by next year, as long as the U.S. economy doesn't fall off a cliff,' said Benito Berber, economist for Latin America at RBS Greenwich.
Still, some analysts believe Americans are undergoing a secular shift in their spending patterns, converting a once free-spending nation into one of savers -- and boding poorly for a Mexican recovery.
(Editing by Leslie Adler) Keywords: MEXICO ECONOMY/ (pedro.dacosta@thomsonreuters.com; Tel: +1 646 223-6310; Reuters Messaging: pedro.dacosta.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
MEXICO CITY, Aug 20 (Reuters) - Mexico's economy plunged 10.3 percent in the second quarter, its deepest contraction on record as withering exports forced factories to slash production and cut jobs.
The year-on-year decline in gross domestic product reported by the national statistics agency on Thursday was the deepest decrease in quarterly GDP in records dating to 1981.
With a downturn in the United States choking off demand for its manufacturing goods, Mexico is on track for its most severe recession since the 1930s. The economy is expected to shrink about 7 percent this year.
'Exports have declined very sharply and we do not see yet a reaction to the slow improvement in economic activity in the United States,' said Claudio Loser, president of Centennial Group Latin America and a former senior International Monetary Fund official.
Compared with the first quarter, Mexican GDP fell 1.12 percent, compounding a recession that has wiped out hundreds of thousands of manufacturing jobs. Some 80 percent of Mexican exports, including cars and televisions, go to the United States.
A severe bout of the H1N1 influenza virus made matters worse, hurting the country's key tourism industry and other services.
'Things are really tough right now,' said Karla Grijalva, 22, who was laid off from her job as a secretary six months ago and has yet to find work.
LESS BAD, NOT YET BETTER
To be sure, there have been some signs of recovery in both Mexico and America.
In the United States, the battered housing sector is showing signs of bottoming out, and manufacturing surveys have been ticking steadily higher.
In Mexico, industrial output is deteriorating at a less drastic clip and consumer sentiment has edged higher from a record low in May.
A separate report released on Thursday showed the economy sank 8.08 percent in June from a year earlier, a more moderate decline than during the prior two months.
'I expect Mexico's economy to stabilize by the fourth quarter and begin growing by next year, as long as the U.S. economy doesn't fall off a cliff,' said Benito Berber, economist for Latin America at RBS Greenwich.
Still, some analysts believe Americans are undergoing a secular shift in their spending patterns, converting a once free-spending nation into one of savers -- and boding poorly for a Mexican recovery.
(Editing by Leslie Adler) Keywords: MEXICO ECONOMY/ (pedro.dacosta@thomsonreuters.com; Tel: +1 646 223-6310; Reuters Messaging: pedro.dacosta.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.