Economics: Worse than anything in many decades and without a goverment strategy
With the 2020 international economic outlook made much worse by what the IMF has termed the "Great Lockdown" and the deepening of the oil market depression, we at GEA adjusted our 2020 macroeconomic forecasts from those we released March 27. Some financial institutions and analysts are forecasting a quick economic recovery once the most critical phase of the pandemic passes, sometime around the second and third quarters of the current year. Even though a number of countries and subnational regions are beginning to experiment with partially easing some of their most stringent measures by allowing some previously restricted commerce and production activities to resume, we remain convinced that such a rosy V-shaped economic recovery remains highly improbable at this point, especially in the case of Mexico.
The Mexican economy was already seriously faltering during the first quarter and is clearly heading for a much more severe plunge as we now expect aggregate supply and demand to fall four percentage points more than our previous estimate, a double-digit reduction in private consumption and a gross fixed capital formation contraction more than double our late March projection. Any medium-term economic recovery could be delayed by the depth of the drop in consumption and investment, as well as the time it will take families to recover their savings or pay off the debts that they assumed over the course of the pandemic.
Such a severe erosion of activity will likely be further aggravated by the slashing of Pemex bonds to junk status, adding to pressure on Mexico country risk.
Now read on...
Register to sample a report