Mexican economy likely hit by fuel crunch in January: central bank nominee

An employee fills a vehicle with fuel at a gas station in Mexico City
An employee fills a vehicle with fuel at a gas station in Mexico City, Mexico, January 14, 2019. REUTERS/Henry Romero

January 15, 2019

MEXICO CITY (Reuters) – Mexico’s economy could contract in January due to a slowdown in activity caused by fuel shortages, one of the government’s candidates to serve on the central bank board said on Monday.

Jonathan Heath, one of President Andres Manuel Lopez Obrador’s nominees for the bank, told a congressional hearing the shortfalls stemming from a government crackdown on rampant fuel theft could become a serious risk if they go on for weeks.

“For January, right now I’d think that we could see a negative rate (of growth),” Heath said. “If it goes on beyond February, March, who knows when, we could start to get in to something dangerous, and then I would be more worried.”

“If it’s a problem that lasts a week, two more weeks, and we see things starting to work themselves out, I think the effects could be minimal,” the economist added.

Industry groups say the economy could suffer if the bottlenecks in supply that have caused long lines of motorists to form outside gas stations across Mexico are prolonged.

Several states complained they were given no warning by the government that it was about to shut down major pipelines in order to stop the theft that has caused billions of dollars worth of losses to Mexico in recent years.

The government launched its crackdown on theft on Dec. 27, and shortages started to be felt about a week later.

(Reporting by Adriana Barrera; editing by Chris Reese)

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