They estimate that Mexico’s GDP will not restore its pre-merger level until 2024
MADRID, Esp. (Europa Press). Mexico’s GDP will not restore previous levels of the epidemic until 2024, due to the country’s strong economic deterioration during 2020, according to an analysis by Crdito y Caucin.
According to the company, Mexico has shown “extreme vulnerability in the face of the effects of the epidemic and limited fiscal and monetary measures, which expect a slow and gradual return to growth.”
Among the reasons that explain the great impact of the virus on the Mexican economy are the fragility of the health system, its “close coincidence” with the economic cycle of the United States, and its heavy dependence on tourism.
In addition, the main export sector, automobiles, has suffered from a sharp drop in external demand and serious supply chain disruptions.
On the other hand, Crdito y Caucin notes that the fiscal and monetary measures taken by the government of Anders-Manuel Pez Obrador to counter the slowdown have been limited. The study indicates that “the central bank maintains interest rates at 4%, which is a relatively high level, and that financial incentives are barely equivalent to 1% of GDP.”
The report notes that merchandise exports should receive a boost thanks to the US economic outlook. However, prospects for recovery still depend on the evolution of the pandemic and implementation of vaccines.
In this context, the recovery will be slow and gradual, while uncertainty in economic policy and concerns about institutional stability will continue to negatively affect business confidence.
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