Mexico’s economy contracted in the fourth quarter and ended 2019 with its worst performance in a decade, as President Andres Manuel Lopez Obrador struggles to deliver the fast growth that he promised.

Gross domestic product in the three months through December fell 0.14% compared to the previous quarter, in line with forecasts in a Bloomberg survey and slightly worse than the drop estimated in preliminary data last month.

On an annual basis, GDP declined 0.5% during the quarter, more than the 0.4% drop expected by economists. For the full year of 2019, activity fell 0.1%, the worst performance since Mexico’s 2009 recession.

The result caps a disappointing first full year in office for Lopez Obrador, who during the campaign had promised that the economy would be growing at an average rate of 4% under his administration. While the economy is expected to recover in 2020, analysts have been scaling back estimates to just 1% growth, down from a forecast of 1.6% six months ago.

“Last year was one to forget given that the economy entered recession despite favorable external winds,” said Alberto Ramos, chief Latin America economist at Goldman Sachs. “The expectation for 2020 is for a modest rebound to a still sub-trend 1%. But it isn’t a given that we are going to get there. Government policy uncertainty is one of the main drivers of the underperformance of the economy.”

That uncertainty is perhaps most evident in gross fixed investment, which includes company spending on factories and machinery. It shrank in 12 of the past 13 months since Lopez Obrador canceled a $13 billion airport project already underway.

Still, one sign of a rebound began in December, when economic activity, as measured by IGAE, grew 0.7%, more than the 0.5% forecast by economists.

For now, the government maintains a more optimistic 2% growth forecast for the year, raising questions about how it might make up possible revenue shortfalls if the economy disappoints. Finance Minister Arturo Herrera says that a stable environment for inflation, the peso and oil output will help the country to recover, while its main boost will come from the ratification of the reworked North American free trade agreement.

Lopez Obrador’s latest plan to regain investor confidence will be presented publicly by the end of the month, according to his chief of staff, Alfonso Romo. Romo said the Energy Ministry is evaluating about $100 billion of projects presented by the private sector to see which ones fit the national development plan.

Lopez Obrador has argued that while the economy hasn’t grown, well-being has improved as wealth is being distributed more equally under his government. The percentage of Mexicans earning less than the cost of the nation’s basic food basket fell to 37.3% in the fourth quarter, the lowest in a decade, according to Coneval, Mexico’s social policy evaluation council.

Mexico’s release Tuesday shows that industrial sectors, including mining, construction and manufacturing fell 1.2%, while agriculture, livestock and fishing industries contracted 1.1%. Service sectors including commercial activity, transportation, financial and media grew 0.2% from the previous three months.

Nacha Cattan, Bloomberg

What Bloomberg’s economist says

The data adds evidence of stagnant economic activity and weak domestic demand through the fourth quarter. It suggests that growth probably bottomed, but did not recover, in 2019, and support concerns about downside risks in 2020.

The result implies a negative and widening negative output gap. It argues against tight monetary conditions and support expectations for the central bank to continue cutting interest rates.

— Felipe Hernandez, Latin America economist for Bloomberg Economics