October 29, 2019 / 2:46 PM / 23 days ago

Mexico's economy seen growing 0.2% in third quarter

MEXICO CITY (Reuters) - Mexico’s economy is expected to have posted marginal growth in the third quarter, underlining the challenge facing President Andres Manuel Lopez Obrador as Latin America’s second largest economy fails to pick up steam, a survey showed on Tuesday.

Gross domestic product growth in Mexico is seen at 0.2% in the third quarter versus the previous three-month period, in seasonally adjusted terms, according to the median forecast of 11 analysts and economists. MXGDQP=ECI

The economy’s sluggish performance has dogged Lopez Obrador since taking office in December 2018. Mexico barely escaped a recession in the first half of the year, after the economy posted no growth in the second quarter and contracted 0.3% in the first.

The poll forecasts no GDP growth in the third quarter versus a year earlier and when unadjusted for seasonal swings. MXGDYP=ECI

Central bank board member Jonathan Heath said on Monday that recent weakness in Mexican exports suggests the economy likely contracted in the third quarter.

Mexico’s latest trade data suggested economic activity may have shrunk in September compared with the previous month, which meant there was a “high probability that GDP in the third quarter ends up in negative territory,” Heath said on Twitter.

Economic activity grew by just 0.1% in August from July and contracted 0.2% in July from June in adjusted terms, revised data showed.

Investor confidence in Mexico has been shaken by some of the decisions made by Lopez Obrador, a leftist exponent of economic nationalism who has vowed to reduce chronic inequality and deliver average annual growth of 4%.

In particular, the president’s decision to cancel a partly built, $13 billion airport for Mexico City and his retreat from the prior government’s opening of the oil and gas industry to private capital have raised doubts about his economic credentials.

In his Sep. 1 state of the union address, Lopez Obrador said that income distribution would remain a priority over economic growth.

He has argued that by redistributing wealth better, his government is able to help economic development among the poor even with lower headline growth numbers.

Lopez Obrador said his administration will “gradually push aside the technocratic obsession of measuring everything based simply on economic growth.”

The INEGI statistics agency will publish preliminary GDP data for the third quarter on Wednesday.

Reporting by Miguel Angel Gutierrez; Additional reporting by Gabriel Burin in Buenos Aires; Writing by Anthony Esposito; Editing by Alison Williams and Marguerita Choy

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