(Reuters. Mexico’s economy shrank by 0.4% in the third quarter. It was slower than thought because services fell and supply chain issues got worse.

The official statistics agency INEGI adjusted the previously published preliminary data to show a lower 0.2% contraction.

A Reuters poll predicted that activity would fall 0.3% by the end of the data.

Global supply chain disruptions have weighed heavily on a recovery in manufacturing, notably in carmaking https://www.reuters.com/business/autos-transportation/mexicos-auto-heartland-workers-struggle-chip-shortage-bites-2021-11-24, while service sector activity slowed during the summer from a resurgence in the coronavirus.

Alberto Ramos from Goldman Sachs (NYSE 🙂 said that “going forward, supply chain frictions, cost push pressures, lingering political uncertainty and weak business confidence will likely weigh on the broad Industrial Sector.”

Secondary activity (which includes factories) increased 0.3%, slightly less than preliminary data’s 0.7%. Tertiary activity, which includes services and transport, contracted nearly 1%, the INEGI data showed https://www.inegi.org.mx/app/saladeprensa/noticia.html?id=6949.

Ramos, however, predicted a revival in the next quarters.

Andres Manuel Lopez Obrador (President) was asked about negative data and said that Mexico would meet its government’s target of 6% growth this year.

He mentioned the 4.5% growth rate INEGI reported Thursday on the quarter.

BANK WOES

A deeper drop in growth may quieten the calls for Banco de Mexico (the country’s central bank) to act faster to manage inflation and increase its interest rates at its December policy meeting.

Mexico’s central banks have a singular mandate to reduce inflation. But, they often discuss economic growth when discussing policy. The bank is also grappling with uncertainty about its next governor after Lopez Obrador ditched his first pick and chose instead a lesser-known economist https://www.reuters.com/markets/currencies/leadership-shake-up-test-mexican-central-bank-inflation-soars-2021-11-24.

Lopez Obrador defended the plan on Thursday, calling Victoria Rodriguez, the deputy finance minister, a responsible and honest professional that meets all requirements.

In an unsuccessful battle against price increases, Banxico has steadily and slowly increased rates over the past months.

The bank also considers Mexico’s peso, which on Wednesday was its weakest since February against the dollar.