The coronavirus-induced economic crisis will hit Mexico harder than any other country in Latin America, predicts the International Monetary Fund (IMF).

In its June World Economic Outlook Update, the IMF forecast that Mexico’s GDP will shrink 10.5% this year, 3.9% below its April prediction of a 6.6% contraction.

The forecast is considerably worse than those of the World Bank, the Organization for Economic Cooperation and Development and the United Nations Economic Commission for Latin America and the Caribbean, which are currently predicting that Mexico will suffer an economic contraction in 2020 of 7.5%, 8.6% and 6.5%, respectively.

If the IMF prediction proves to be accurate, Mexico will suffer its worst recession since 1932 when the economy contracted 14.8% amid the Great Depression.

The IMF’s 2020 growth forecasts for other major Latin American economies are: Brazil, 9.1% contraction; Argentina, 9.9%; Colombia, 2.4%; Chile, 4.5%.

The organization predicts that the GDP of the Latin America and the Caribbean region as a whole will shrink by 9.4% this year, while global economic output is forecast to contract 4.9%, a 1.9% decline compared to its April prediction.

“The Covid-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF said.

The growth forecast for Mexico is also below that of its North American trade partners, the United States and Canada, which the IMF predicts will suffer contractions of 8% and 8.4%, respectively, in 2020.

However, the outlook for Mexico in 2020 is better than the forecasts for the economies of France, Italy and Spain, all of which are predicted to contract by more than 12%.

The IMF predicts that the Mexican economy will grow 3.3% in 2021, an increase of 0.3% compared to its April forecast. However, the 2021 prediction for Mexico is below the 3.7% growth forecast for Latin America and the Caribbean and the 5.4% global forecast.

Mexico’s central bank is currently offering the most optimistic growth forecast for 2021, the newspaper El Universal reported, predicting that GDP will increase 4.1%.

Source: El Universal (sp)