National Debt Rises While Bank Profits FallBy Peter Appleby | Thu, 07/09/2020 - 17:19
Cuts in public institutions and a refusal to help small business has done nothing to push back the tide of rising debt caused by COVID-19. A mixed view on Mexico’s investment future and a fall in profits for banks makes it clear that the country’s return to a “new normal” will be some way off just yet.
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Consumers are concerned about their financial future and, as a consequence, are using bank’s services in a different manner compared to the pre-pandemic period. Many bank’s profits have dropped as fewer people are using credit cards or applying for loans and many millions took offers to delay loan repayments for six months. With this period soon to end, banks will again see an inflow of credit payments. But free-and-easy spending is likely to be off the table for the immediate and mid-term future.
A Credit Suisse survey has demonstrated the unclear opinion of the financial sector on Mexico’s future. While confidence in Mexico’s long-term outlook is certainly slipping, it is doing so to various degrees. While 45 percent of industry respondents considered it to be a “bad moment” to invest in Mexico, another 21 percent said now is a good time to commit financially to the country. The future appears unclear.
Although Mexico’s Tax Administration Service was able to avoid damage or lost data from its most recent cyberattack, the growing threat of this kind of attacks is clear. Both Banxico and CONDUSEF were also attacked this week.
Mexico’s national debt continues to rise despite the austerity measures put in place by the López Obrador administration. Alongside the half million businesses that are expected to close due to the pandemic and the mounting job losses, the outlook for the country’s national debt looks bleak.