Mexican gross fixed investment suffers record fall in April

MEXICO CITY (Reuters) - Mexican gross fixed investment in April suffered its biggest monthly fall on record, as the coronavirus pandemic battered Latin America’s second-largest economy.

Spending on machinery, equipment and new construction plunged by 28.9% in seasonally-adjusted terms from March, the sharpest drop since current records began in early 1993.

In unadjusted terms, investment plummeted 36.9% from the same month a year earlier, the biggest decline since September 1995, when the country was reeling from a peso shock that triggered the economic meltdown known as the Tequila crisis.

Mexico’s economy is likely to contract by 10.5% this year, the International Monetary Fund said last month. The finance ministry and the central bank have said the recession will be the worst since the 1930s Great Depression.

Fiscally conservative President Andres Manuel Lopez Obrador has resisted pressure to borrow to fund an economic stimulus package, while picking fights with businesses that have chilled the investment climate.

“The outlook for real GDP growth in Mexico is very negative due to a combination of domestic and external factors, and so far the policy response has been underwhelming, particularly on the fiscal front,” Goldman Sachs’ economist Alberto Ramos said in a client note.

Writing by Frank Jack Daniel, Editing by Franklin Paul