Better Panorama for Mexico in 2021: Barclays

COVID-19 vaccines are coming and some countries are already applying them. This week, the Mexican government released its vaccination plan to combat the COVID-19 pandemic. The plan aims to vaccinate all Mexicans before the end of 2021. This has increased optimism for Mexico as it seems to signal future stability. “The panorama looks much better with the vaccines because they have higher efficacy rates than expected. The UK has applied its first vaccine and the follow-up process will take time but Mexico is one of the better-positioned countries in Latin America,” said Marco Oviedo, Chief Economic Investigator for Latin America at Barclays, in a videoconference for Economic Perspectives in 2021, reported Expansion.

The rate at which vaccines have been released offers optimism for markets everywhere. In October, Oviedo told El Economista that Mexican finances were not going to do well in 2020, expecting a decrease in GDP of 8.8 percent for the year. He also indicated that 2021 would see a decrease of around 3 percent. After the vaccination plan was revealed, Oviedo said that “for next year we were expecting an increase of 3 percent. Now, after knowing everything about the vaccines, we foresee an expansion of 4.5 percent,” reported el Heraldo. The number, to him, is still prudent, but there is room for more. “If the vaccination strategy were more effective or faster, the economy could grow between 5 and 6 percent,” he continued. EL CEO mentions that Oviedo’s expectation of an 8.8 percent decrease for 2020 has not changed.

Oviedo did mention that the recovery of Mexican industries has not been the same across sectors. He told Expansion that the manufacturing industry in Mexico has slowly reopened but many industries that rely largely on human interaction, such as entertainment, transportation and tourism, have been more affected. EL CEO explains that Mexico’s economic recovery is reliant on many factors, including industries’ recovery as well as public, private and foreign investments, which might be hard as 2020 affected Mexico’s foreign direct investment (FDI) greatly. If investments improve, Oviedo thinks that Mexico can become stronger in the medium term, Milenio highlights.