Banxico estimates that GDP will decline 8.7% in 2020 growth next year

The Bank of Mexico (Banxico) expects the economy to contract by 9.3% for 2020 in its worst-case scenario. At best, the drop in GDP would be 8.7%.

Although the number is still negative, it is better than previous expectations of 12.8%.

in that One-third report The central bank indicates that by 2021 there will already be a growth scenario of 0.6-5.3%; Whereas in 2022 it is estimated to grow between 2.6 and 3.8%.

Lee: GDP recovers 12% in the third quarter, but maintains a contraction of 8.6% compared to 2019

In the central scenario, Banxico assumes a “gradual recovery, at a moderate pace” until it reaches inertial growth by 2022.

In Mexico, after the sharp contraction of GDP in the second quarter, the economy showed a recovery in the third quarter, driven by the reopening of activities and the rebound in external demand; Still lower than previous levels of the health emergency. pic.twitter.com/5bwyMxjhup

– Bank of Mexico (Banxico) November 25, 2020

This comes after the contraction of economic activity in April and May, due to the Covid pandemic, and measures to prevent the spread of the virus.

It has recovered since June due to the resumption of productive activity in various sectors and the reactivation of demand, especially foreign demand. However, it is still below pre-pandemic levels and uncertainty remains noticeable regarding the future development of the economy, as the epidemic continues, restrictions on the operation of various activities remain, and the effects remain unknown. central bank.

But he also sees risks in the future that may affect the national economy. The first is that social distancing measures are lengthy or the resumption of stricter measures, at the global and national levels.

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There are also fluctuations in the international financial markets and internal uncertainty that affects investment in the country. In addition, support measures at the national or international level are insufficient to avoid further damage, and the consequences for the economy are more permanent.

The downgrading of sovereign and Pemex debt is also a cause for concern, as this will affect access to financial markets.

On inflation, the Bank of Mexico expects to remain near 3%, as it revised downward its forecast.