The Organization for Economic Cooperation and Development (OECD) has downgraded its 2020 economic forecast for Mexico to a contraction of 10.2% down from -7.5% in June.

Among G20 counties, Mexico is predicted to suffer the fourth deepest recession after South Africa, Argentina and Italy. The OECD predicts that India will suffer an economic contraction equal to that forecast for Mexico.

The only G20 country where the economy is forecast to grow this year is China with GDP to increase 1.8%, according to the OECD. Global GDP is predicted to decline 4.5% in 2020, a 1.5% improvement compared to the OECD’s June forecast.

In its Interim Economic Outlook report, titled Coronavirus: Living with uncertainty, the OECD said that output declines in 2020 in Mexico, Argentina, India and South Africa are projected to be even deeper than anticipated earlier due to “the prolonged spread of the virus, high levels of poverty and informality, and stricter confinement measures for an extended period.”

Mexico currently has the seventh highest coronavirus case tally in the world and fourth highest Covid-19 death toll, according to data compiled by Johns Hopkins University.

The Mexican economy contracted 18.7% in the second quarter of 2020, a period that included two full months – April and May – when federally-mandated coronavirus restrictions were in force.

The government’s support for business amid the economic crisis has been extremely limited, triggering criticism from the private sector and many analysts.

While the outlook for this year is gloomy, the OECD predicts that Mexico’s growth figures will be back in the black in 2021 with GDP forecast to increase 3%. That forecast is unchanged from June.

For Mexico’s North American trade partners, the United States and Canada, the OECD is predicting contractions of 3.8% and 5.8%, respectively, in 2020, and growth of 4% in both countries next year.

The organization said its projections assume that a coronavirus vaccine will not become widely available until late in 2021.

Published Wednesday, the OECD forecasts come three weeks after Mexico’s central bank said in a report that GDP could contract by 12.8% in 2020 in a worse-case scenario.

Source: El Financiero (sp)