September 26, 2019 / 12:12 PM / 25 days ago

UPDATE 1-Mexican economy continues to sputter, shrinks 0.1% in July from June

(Recasts lede, adds data from statistics agency, background details)

MEXICO CITY, Sept 26 (Reuters) - Mexico’s economy contracted at the start of the third quarter, after barely escaping a recession in the first half of the year, data from the national statistics agency INEGI showed on Thursday.

Economic activity shrank 0.1% in July from June in seasonally adjusted terms and expanded 0.3% from July of 2018 in non-seasonally adjusted terms.

In seasonally adjusted terms, primary activities, which include agriculture, forestry and fishing, grew 3.5% in July from June.

Secondary activities, which include manufacturing, mining, construction, power generation, transmission and distribution, fell 0.4% over the same period. Tertiary activities, including retail and services, fell 0.1%.

The new activity data underlines the economic challenge facing President Andres Manuel Lopez Obrador, after Latin America’s second largest economy already posted no growth in the second quarter and contracted in the first.

Investor confidence in Mexico has been shaken by some of the decisions made by Lopez Obrador, a leftist exponent of economic nationalism who took office in December vowing to reduce chronic inequality and deliver average annual growth of 4%.

In particular, the president’s decision to cancel a partly built, $13 billion airport for Mexico City and his retreat from the prior government’s opening of the oil and gas industry to private capital have raised doubts about his economic credentials.

During the past few months, private and public sector analysts have pared back their growth forecasts for Mexico, with some now predicting little expansion at all in 2019.

The government’s preliminary budget program, published earlier this month, forecast economic growth for 2019 at 0.6% to 1.2%. (Reporting by Anthony Esposito; Editing by Toby Chopra)

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