IMF: Mexican economy will be one of the hardest hit by COVID-19

The impact of the pandemic COVID-19 in the Mexico's economy will be strong. He will cause a contraction of 10.5 percent in GDP in 2020. That is what the International Monetary Fund estimated (IMF).

In April, the agency projected a 6.6 percent drop in the national Gross Domestic Product (GDP). By 2021, the IMF estimates a rebound of 3.3 percent, instead of 3 percent.

For the Euro zone as a whole, a contraction of 10.2 percent in its GDP is seen in 2020. In addition, a rebound of 6.0 percent is expected in 2021. That is a reflection of the severe impact estimated in the Italian and Spanish economies.

COVID-19 in Mexico

For the United States, the forecasts for the IMF they consider a recession of 8 percent in 2020 to advance 4.5 percent next year. It is a downward adjustment of 2.1 and 0.2 percentage points from the April estimate.

For Canada the projections are similar. A drop in GDP of 8.4 percent and a recovery of 4.9 percent are expected in 2020 and 2021, respectively.

China's GDP will grow one percent in 2020. Still, it is expected to advance 8.2 percent next year, estimates lower than those previously provided by the agency.

Mexico is not only the Latin American country with the most negative forecast

Sand waits for the Economy of mexico expect your GDP to fall at a double-digit rate. 

Mexico will be one of the countries hardest hit in its economy by the pandemic. For that reason, an improvement in their business environment would help them recover and benefit from the opportunities that the USMCA trade agreement represents.

That is what Malhar Nabar, head of the Economic Studies division of the International Monetary Fund (IMF) Analysis Department, pointed out.

According to the IMF, investment and productivity growth would benefit from strengthening competition and removing barriers to trade in services. In addition, it would be interesting to encourage greater private sector participation in the oil extraction and refining sector.

"An improved business environment would help the economy recover from the pandemic and lift Mexico's relatively low potential growth rate," the IMF noted.

At this stage of the pandemic COVID-19, Mexico's immediate priority should be to expand fiscal support. In this way, the country will be able to save lives and livelihoods. This will be achieved with the implementation of life lines with larger fiscal supports.

In addition, supports must be timely, specific and temporary. In turn, these measures will help reduce the risks of a deeper recession in the Economy of mexico. 

Also read:

Economic Recession: more than 150,000 businesses close in Mexico