Credit Suisse lowered its estimation for Mexico’s economic efficiency this year and now expects a 4.0% contraction, based on a note sent to the bank’s customers Tuesday, including to a series of downgrades since the coronavirus outbreak.
Beforehand, the bank estimated that Mexico’s real gross domestic product (GDP) would advance by a modest 0.7% this year.
Credit Suisse stated the Mexican government could end up reducing a budget surplus target for this year so as to accommodate more spending to address disruptions arising from the coronavirus pandemic.
Latin America’s #2 economy had already been blown by a weak investment since 2019 due in part to ambiguity over the policies of President Andres Manuel Lopez Obrador.
Mexican GDP contracted by 0.1% in 2019, the first annual contraction in the past 10 years, and Lopez Obrador’s first full year in office.
Late last week, Barclay’s investment bank stated that this year’s economy will likely be weaker than that of 2019, also citing anticipated coronavirus disturbance. Barclays cut its GDP estimation for Mexico to a shrink of 2% from a prior forecast for 0.5% growth.
Others, along with Moody’s Analytics, Capital Economics and Goldman Sachs, have issued negative forecasts.
Credit Suisse flagged falling industrial and service results, besides an expected plunge in crude production from state oil firm Pemex prompted by slumping prices, as the primary drivers for the downwardly revised forecasts.