Mexico’s GDP is Down According to Banxico’s Survey

Mexico’s Gross Domestic Product (GDP) could grow 0.91 percent in 2020 and not the 1.00 percent expected in January, according to a Banco de Mexico (Banxico) survey that included 38 economic analysts. By 2021 the expected economic growth also went down to 1.60 percent, from the 1.70 percent projected earlier.

Analysts consulted by Banxico believe that the National Consumer Price Index (INPC), or inflation, could increase 3.53 percent in 2020, a higher figure than the 3.50 percent forecasted in January. INPC projection for 2021 was left unchanged at 3.50 percent.

According to the February results of Banxico’s Survey on Expectations from Private Sector Specialists, the expected exchange rate by the end of 2020 will be MX$19.50 per dollar, 16 cents less than the prior estimation. A MX$20 per dollar for 2021 was also unchanged from the previous estimate.

The survey was made last week when the COVID-19 (coronavirus) outbreak began to take a toll on markets worldwide and Mexico was tagged as a low risk country. Today the Organization for Economic Co-operation and Development (OECD) announced it expects the world’s economy grow half in 2020, leaving it at 1.5 percent, according to the most adverse scenario analyzed by the international body.

Apart from the deep decline in China’s GDP, there have been reported lower growth estimations for the Japanese economy, as well as for the fragile situation in South Korea and Italy that could trigger a global slowdown. OECD anticipates that if the virus spreads to Japan and Europe more economies could go into recession.

Manufacturing activity in every major country in the world is also expected to slow down. This causes a major threat on economies that are highly dependent on global manufacturing supply chains, which is the case of Mexico. If contractions in production continue to happen due to major supply chain disruptions, a worsening crisis is expected.

Governments and authorities have been calling people not to panic expecting markets not to overreact, however a growing number of analysts are warning about a global recession, saying the COVID-19 infection is far from over.

Stock markets bounce back

After a week of losses, Dow Jones gained little more than 5 percent on Monday while S&P 500 and NASDAQ rose more than 4 percent. Bolsa Mexicana de Valores IPC gained 2.04 percent from Friday’s session, giving some fresh air to stock markets and investors in the start of the week.

Exchange rate also had some relief after closing Monday at MX$19.74 per dollar, a gain of 24 cents for the national currency.