Baja California’s economy contracted by 1.4 percentage points during the first half of this year, according to Mexico’s National Institute of Statistics.
That puts the border state among the worst performing of Mexico’s 31 states for the same time period, and below the national average.
Economists say Baja California has suffered from a sales tax hike that took effect in January. Border states used to have a lower sales tax than other Mexican states, but lawmakers upped the tax to 16 percent, in line with the rest of the country.
Still, Baja California currently has the worst economy in terms of growth than any of the Mexican states bordering the U.S.
But economists and local lawmakers see hope in Mexico’s recent energy reforms, which allow foreign investment in the country’s lucrative oil and gas sector. Lower energy prices for manufacturing could help Baja California’s maquiladoras, one of the state’s biggest industries.
Baja California's government sought to counteract the negative economic figures coming out of the national report, noting in a statement that the state's economy had improved during the second quarter of this year compared to the first. Strong agricultural growth has helped counterbalance poor performance in other sectors of the state's economy, including construction.
