UPDATE 2-Mexican economy ended 2020 stronger than first estimated

·2 min read

(Adds comments from Mexico's central bank, economist)

MEXICO CITY, Feb 25 (Reuters) - Mexico's economy grew quicker than first estimated during the fourth quarter as the country recovered from its sharpest economic contraction in nearly nine decades, official data showed on Thursday.

National statistics agency INEGI said the economy grew by 3.3% in the fourth quarter of 2020 compared with the previous three-month period, revising up its Jan. 29 preliminary estimate that gross domestic product (GDP) had expanded by 3.1%.

"With the better than expected 4Q2020 print we now expect real GDP growth to firm to 4.5% in 2021, from 4.0% previously, with the growth momentum skewed towards the 2H2021," Goldman Sachs economist Alberto Ramos said in a note to clients.

Minutes from the Bank of Mexico's last monetary policy meeting showed the majority of its five board members believed the pace of economic recovery would be moderate.

One board member said new restrictions on mobility in Mexico will weigh on the recovery, while another member noted that given expectations of greater fiscal stimulus in the United States, external demand is expected to continue being a significant driver of Mexico's recovery.

Yet another member projected that the recovery will be heterogeneous, with a strong external sector but with consumption and investment below pre-pandemic levels.

Battered by disruptions triggered by the coronavirus pandemic, GDP in Latin America's second-biggest economy plummeted by 8.5% across the whole of 2020 in seasonally-adjusted terms, INEGI said, confirming its preliminary estimate.

That is the biggest decline since 1932 during the Great Depression.

Compared with the same quarter a year earlier, the economy shrank by 4.3% in the final three months of 2020, the statistics agency said. In seasonally adjusted terms, the economy contracted by 4.5% year-on-year.

Meanwhile, the economy grew 0.1% in December from November and contracted 2.7% from December of 2019, a separate INEGI report showed. (Reporting by Anthony Esposito; Editing by Alex Richardson and Alistair Bell)