Pandemic Recession for 2020, Economic Growth for 2021By Gabriela Mastache | Thu, 04/02/2020 - 10:49
The Mexican Institute of Finance Executives (IMEF) anticipates a recession of the Mexican economy given that many indicators point to a deterioration of the non-manufacturing sectors, such as commerce and services, as a result of the measures implemented to stop the spread of the disease.
According to IMEF, the non-manufacturing sector registered a 9.2-points fall in March, leaving the indicator at 39.4 units, its lowest historic level on IMEF’s indicators. The manufacturing sector ended March with 45 units, experiencing a contraction for 11 months in a row. IMEF’s indicators tend to fluctuate between 0 and 100, with levels above 50 points showing sector growth. According to Jonathan Heath, Deputy Governor of Banxico, IMEF’s results tout a contraction of the economic activity and anticipate a “pandemic recession.”
IMEF is not the only one anticipating a strong economic contraction. Bank of America (BofA) expects an 8 percent contraction in the Mexican economy. This represents a downward revision from their previous expectation, which was at a 4.5 percent. According to BofA, the revision downwards is the result of the rapid deterioration of the US economy, the fall in commodity prices, in particular oil, and the country’s sanitary emergency declaratory. However, for 2021, BofA anticipates 4.5 percent growth for the Mexican economy, which is expected to be boosted by the US economy.
Though IMEF’s indicators show that the measures taken by the US to prevent the disease from spreading have impacted the performance of the economy, during February 2020 Mexican exports to the US still showed a positive performance with 5.2 percent growth. The success of Mexican exports shines when compared to China’s exports to the US, which fell 31.3 percent in February.
Mexican exports to the US totaled US$29.05 billion while Chinese exports totaled US$22.81 billion. These results continued to position Mexico as the US’ main commercial partner, followed by Canada and China. However, US exports to its main commercial partners experienced negative growth rates. For Canada exports decreased 0.5 percent, exports to Mexico were reduced in 0.4 percent and to China in 19.2 percent.