The Bank of Mexico (Banxico) predicted a contraction of the economy of 9.3% by 2020 at its worst. At best the fall in GDP would be 8.7%.
Although the figure is still negative it is better than the previous forecast which was 12.8%.
In its quarterly report, the central bank notes that by 2021 there would already be a growth scenario of between 0.6 and 5.3%; while by 2022 it estimates growth of between 2.6 and 3.8%.
Read: GDP recovers 12% in third quarter, but retains contraction of 8.6% compared to 2019
In its central scenario, Banxico “represents a gradual recovery, at a moderate pace” until reaching inertial growth by 2022.
In Mexico, after a sharp contraction in GDP in the 2nd quarter, the economy showed a recovery in the 3rd, driven by reopening activities and an uptick in external demand; still remains below pre-health emergency levels. pic.twitter.com/5bwyMxjhup
— Bank of Mexico (@Banxico) November 25, 2020
This would come after the contraction to economic activity in April and May, due to the COVID pandemic, and measures to prevent the spread of the virus.
“Since June it has recovered as a result of the resumption of productive activity in various sectors and a revival of demand, especially external one. However, it remains below pre-pandemic levels and there remains marked uncertainty about future economic developments, as the pandemic remains ongoing, restrictions remain on the operation of various activities, the most lasting impacts are still unknown,” the central bank said.
But it also sees future risks that can affect the national economy. One is that social estating measures are prolonged or stricter measures are taken, both at the global and national levels.
Find out: Coronavirus: Latin American countries whose economies will take longer to recover from the pandemic
Also that there is volatility in international financial markets and domestic uncertainty affecting investment in the country. As well as that support measures at the national or international level are insufficient to avoid further impacts and that the aftermath of impacts on the economy is more permanent.
Reducing the rating of sovereign and Pemex debt is also a concern, as this would affect access to financial markets.
On inflation, the Bank of Mexico expects it to remain around 3%, as it adjusted its down forecast.
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