Saturday, July 20, 2024

LatAm economic commission forecasts 6.5% contraction this year

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) and the financial institution Citibanamex have both downgraded their forecasts for the Mexican economy this year as the coronavirus pandemic worsens.

ECLAC executive secretary Alicia Bárcena said on Tuesday that the commission is predicting that GDP will shrink by 6.5% in Mexico this year. The commission forecast on April 3 that the contraction would be between 3.8% and 6%.

ECLAC is predicting that the coronavirus pandemic will cause GDP across Latin America and the Caribbean to fall by 5.3%, which would be the biggest recession the region has ever suffered.

In 1914, the first year of World War I, GDP declined by 4.9% while in 1930, the first full year of the Great Depression, the region’s economy contracted by 5%.

“A sharp increase in unemployment is forecast, with negative effects on poverty and inequality,” Bárcena said.

ECLAC said in a press release that Mexico will suffer the impact of a deceleration in the United States’ economy in 2020 and be hit by the decline in oil prices.

Meanwhile, Citibanamax is now predicting that the Mexican economy will shrink by 9% this year. Its previous forecast was a 5.1% contraction.

The bank said that without fiscal support from the government, the economy could contract by as much as 10.5% as a result of the coronavirus pandemic and the measures put in place to limit the spread of the disease. However, Citibanamex predicted that the severity of the recession will force the government to change its attitude on the provision of fiscal support.

President López Obrador said earlier this month that his administration wouldn’t cut taxes for large companies or increase public debt to support the economy amid the coronavirus crisis.

In addition to its bleak growth outlook, Citibanamex estimated that exports will decline 18% this year, personal consumption will fall 11.5% and investment will drop 19.7%.

It also predicted that the economic contraction will push down inflation to a year-end rate of 3% from 3.4% at the end of 2019.

Source: El Financiero (sp) 

Have something to say? Paid Subscribers get all access to make & read comments.
Passengers wait in the crowded Cancún airport during the global Microsoft IT meltdown in Mexico.

Airport chaos and border bedlam: How the Microsoft IT meltdown is affecting Mexico

2
The IT outage that swamped Microsoft Windows computers around the world hit just as hard in Mexico, frustrating travelers of all stripes.
A man in a rain jacket points down at a channelized river below a bridge, full after recent rains.

Drought relents and reservoirs start to recover across rainy Mexico

1
As of July 15, the area of the country suffering from drought was down to almost 50%.
AMLOAMLO and Donald Trump walk down a red carpet in an elegant hallway. and Donald Trump walk down a red carpet in a long corridor.

In response to Trump speech, AMLO plans to send his ‘friend Donald’ a letter

5
"I think they're not informing him well about the migration issue and also about the importance of maintaining economic integration between the United States, Mexico and Canada," AMLO said Friday morning.