372
The Great Recession and Developing Countries
Effects on Output and Employment As noted earlier, the Mexican economy was one of the most affected in the world by the global crisis; GDP, for example, contracted by 6.5 percent in 2009, the largest annual decline in Mexico since 1932. On a quarterly basis, Mexico’s GDP fell by more than 10 percent in the second quarter of 2009, relative to the year-earlier quarter (figure 8.5). Such a contraction was not just the largest since 1981, but could be seen as constituting an economic depression (Barro and Ursúa 2008). The Mexican economy was also hit hard on the employment front. The open unemployment rate reached 6.3 percent in August 2009 (7 percent in urban areas), its highest level since the 1995 Mexico crisis. Unemployment climbed steadily beginning in May 2008, when it was at its lowest level in recent years, and by August 2009 the monthly unemployment rate was 3 percentage points higher. With Mexico’s economically active population approaching 45 million in 2009, this suggests that the number of unemployed in Mexico increased by 1.35 million over a 15-month period. We get a similar picture by
Figure 8.5. GDP Growth Rate, 1981–2009 15
10
%, year-on-year
5
0
–5
–10
–15
19 8 19 1Q 82 1 19 Q2 8 19 3Q1 84 19 Q1 8 19 5Q1 86 19 Q1 8 19 7Q1 88 19 Q1 8 19 9Q1 90 19 Q1 9 19 1Q1 92 19 Q1 9 19 3Q1 94 19 Q1 9 19 5Q1 96 Q 1 19 98 19 Q1 9 20 9Q 00 1 20 Q1 0 20 1Q 02 1 20 Q 0 1 20 3Q 04 1 20 Q 0 1 20 5Q 06 1 20 Q 0 1 20 7Q 08 1 20 Q 09 1 Q 1
1
Q
7 99
1
Source: INEGI.