Mexico confirms economy shrank in Q1, in blow to 'AMLO'

Mexico City (AFP) –


Mexico's economy contracted by 0.2 percent in the first quarter of the year, revised government data confirmed Friday, a rough start for new President Andres Manuel Lopez Obrador.

The contraction raises the specter of recession just months into the anti-establishment leftist's six-year term, threatening his promise to "transform" the country and deliver average annual GDP growth of four percent during his six-year term.

The revised number for January to March was the same as the preliminary figure released in April, which took economic analysts by surprise and triggered talk of a possible recession -- two or more consecutive quarters of contraction -- in Latin America's second-largest economy.

Mexico's economy registered zero growth in the fourth quarter of 2018, according to the national statistics institute, INEGI.

Lopez Obrador -- widely known as "AMLO" -- downplayed the data.

"There's still time" to reach his target of two-percent growth for 2019, he told a press conference.

"I've placed my bet, I'm not backing down. Let's just wait and see how the year ends."

Lopez Obrador won a landslide victory in Mexico's elections last year, taking office in December with a strong mandate.

But the economy threatens to be his Achilles' heel. He has triggered backlash in the business world with some of his policies, including a controversial decision to cancel a $13-billion Mexico City airport project that was already one-third complete.

The central bank and finance ministry cut their economic growth forecast for 2019 by four percentage points in April, to a range of 1.1 to 2.1 percent.

Mexico also announced a trade surplus of $1.37 billion for April, fueled by an 11.7-percent increase in exports to the United States.

Mexico was the largest US trading partner in the first three months of the year, despite President Donald Trump's repeated threats to tear up the two countries' trade agreement and close their shared border.

That was mainly thanks to Trump's trade dispute with China, which previously held the top spot.