Banco de México forecasts a contraction of up to 12.8% this year and a recovery in 2021

Diana Lemus descansa en la entrada de su nuevo hogar, ubicado en la Colonia Potrero del Rey, Ecatepec, el 27 de Agosto de 2020. Con el inicio de la cuarenta por COVID-19, ella y su esposo Oscar perdieron su empleo y con ello los ingresos con los cuales pagaban la renta de un departamento en el Centro Histórico de la Ciudad de México. Ahora se mudaron a Ecatepec con los padres de Oscar y venden sus pertenencias en tianguis del municipio para ganar algo de dinero. (Diana Lemus, en la casa a la que se acaba de mudar en el municipio de Ecatepec. (NAYELI CRUZ / EL PAÍS)

Pledge Times | Bhavi Mandalia.

The economic collapse due to the coronavirus will be deeper than expected but the recovery will be earlier. The Bank of Mexico foresees a fall of up to 12.8% for this year, four points more than in the previous projection, and a modest recovery for 2021, according to the quarterly report released this Wednesday. However, the institution sees a “high degree of uncertainty” due to the still unknown duration of the pandemic and possible outbreaks. The projections are on the back of a historically bad second quarter. Between April and June, GDP fell by 18.7% annually, the largest reduction since there are records, although economic activity experienced a rebound in June with the start of the reopening, as published on Wednesday by the National Institute of Statistics and Geography (Inegi).

The Bank’s projections exude caution. “We are in an area that has no precedent,” said the governor, Alejandro Díaz de León, during the presentation of the report. Instead of a central scenario, the institution has presented three possible ones. At the most favorable, the contraction would be 8.8% and at the worst, 12.8%. They are less optimistic forecasts than those presented in May, when the projected falls ranged from 4.6% to a maximum of 8.8%. The deterioration points to a difficult second semester despite the gradual reopening of activities and the fiscal and monetary measures adopted by the Government and the Bank itself. “It would imply an even more negative environment in the second semester than the one experienced in the first with the confinement and that the measures have not been sufficient to relaunch the economy,” says economist José Luis de la Cruz. Continuar leyendo […]

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