March And April 2020 Experience Mixed Economic ResultsBy Gabriela Mastache | Thu, 05/07/2020 - 14:01
Analysts consulted by Banxico believe that the economy will experience a far steeper economic contraction than what was originally expected by the IMF and other financial institutions. Also, both IMEF’s manufacturing and non-manufacturing indicators experienced important falls. The reduction in economic activity as a result of the COVID-19 pandemic did not prevent remittances and trade between Mexico and the US to reach historic levels. Also, the COVID-19 pandemic has made cooperation between international authorities complicated to prevent money laundering.
In case you missed it, this is what made the headlines over the week!
- Analysts consulted by Banxico expect the economy to contract 7.27 percent in 2020, far lower than the 6.6 percent that the IMF had forecasted in its early April report. The 7.27 percent is also lower than the previously expected fall of 3.99 percent presented in Banxico’s March poll.
- According to IMEF, during April 2020, the country’s economic activity experienced a further contraction. IMEF’s manufacturing indicator experienced a 3.7-points reduction in April, for a total of 40.5 points, which puts it well in the contraction zone. IMEF’s non-manufacturing index registered in April a 3.2-point fall for a total of 35.5 units. This was also the third month in a row with a contraction in this index.
- Trust from business owners in April 2020 has already registered a decrease. According to INEGI’s Monthly Poll of Businesses Opinions, in April 2020, trust of business owners experienced a 7-point reduction in a single month. According to INEGI, this is the lowest level than the indicator has reached since 2011.
- Mexico has consolidated its position as the main commercial partner of the US during 1Q20. According to data from the US, the influx of imports and exports between the two nations accounted to 15.3 percent of the US’ total trade balance. This is the highest quota that Mexico has registered in the US’ trade balance. Mexico is expected to strengthen its participation in the US market and its position as the country’s main commercial partner once USMCA is enforced.
- In March 2020, remittances coming from the US experienced their best month since September 2003. According to data from Banxico, in March 2020, remittances experienced a 35.7 percent increase when compared to March 2019. The total amount of money that entered the country from Mexicans living in the US accounted to US$4.16 billion.
- In April, a total of MX$35 billion were lost because of expenses not made (MX$22 billion of expenses not made in credit cards and MX$13 billion of expenses not made in debt cards). This loss accounts to 1.7 percent of the monthly GDP and 2.6 percent of the private consumption that takes place in an average month.
- The Unit of Financial Intelligence (UIF) says that the risks of money laundering and financial terrorism have also increased during the current quarantine situation. In light of the existing risks associated with money laundering, UIF has asked financial entities to actively send information of suspicious financial operations that could led to illicit activities.