MEXICO CITY – Mexico’s economy shrank nearly 7.0 percent in the first quarter, as manufacturing exports plunged 22.8 percent from a year earlier, the Treasury Department reported Thursday.
The drop “is due to the deterioration of global economic conditions,” the department said.
It was the worst performance since Mexico’s economy fell 6.9 percent for all of 1995, following a financial crisis that saw the value of the peso plunge.
This year, the Treasury Department said, Mexico lost 372,289 jobs in the first three months compared to the first quarter of 2008, a decline of about 2.6 percent of formally registered employees. Many Mexicans work in unregistered jobs.
The central bank previously predicted the economy could contract between 3.8 percent and 4.8 percent for the full year, but has said the forecast could change depending on the effect of the current outbreak of swine flu.
Treasury Secretary Agustin Carstens has said the flu’s impact could cost the economy an additional 0.3 percent to 0.5 percent of GDP. Many experts expect travel warnings issued over the outbreak to hurt tourism, which is Mexico’s third largest source of foreign currency.
The economic report said industrial output declined 12 percent in just the first two months of the year. Mexico’s auto industry has been battered by the slowdown in U.S. vehicle sales.
Retail sales were down by 0.3 percent for the quarter.
Government revenue fell 9.1 percent during the period, with oil income down 17.6 percent and tax collections off 11.4 percent. Government spending, meanwhile, rose 14.5 percent, pushing the public debt up 2.8 percent, to 24.2 percent of GDP.