After a deep contraction, Mexico’s economy, along with related exchange traded fund (ETF), may have no where left to look to but up. Nevertheless, the economy has a couple of snags to overcome.

Mexico’s economy, Latin America’s second largest, contracted 10.3% in the second quarter year-over-year, manufacturing declined 16.4% and the service industry shrank 10.4%, reports Jens Erik Gould for Bloomberg.

Mexico has been stuck in a lull and joblessness has increased as the recession in the United States, which takes in 80% of Mexico’s exports, greatly decreased demand for goods.

Economist Rogelio Ramierz de la O expects the Mexican peso will depreciate along with the shrinking economy. The Central Bank estimates the economy will shrink up to 7.5% this year. A battered economy translates into less tax revenue, and including falling oil revenue, will create a budget deficit of 3% of GDP this year.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.