The economic downturn and outlook Since the middle of last year, Mexico’s economic activity has been decelerating significantly. The slowdown has been deeper and faster in 2013, with virtually no growth during the first quarter and a contraction in the second quarter. Recent GDP shrinkage coincided with the first reduction in both the services sector and consumer expenditures observed during the post-crisis recovery.
The origin of the current downturn can be traced back to two negative shocks that began roughly at the same time. The first has to do with the softening of external demand during the second half of 2012, and in particular, of manufacturing exports, which account for around 80 percent of the country’s total shipments abroad and fueled a considerable slowdown in manufacturing production.