Mexico’s GDP to drop 8.4% this year: Scotiabank

Bloomberg

Mexico’s economic contraction may be deeper than expected, according to Scotiabank.
The bank now estimates Mexico’s gross domestic product (GDP) to drop 8.4% in 2020, more than the 5.77% contraction it predicted on March 20, due to the increasingly adverse economic indicators, Economia Hoy newspaper reported.
The forecast was adjusted due to the lack of an effective policy response to address the health emergency, as well as the lack of fiscal policy, the newspaper said, citing the bank.
Scotiabank also forecasts a loss of 919,000 so-called formal jobs this year, with the unemployment rate increasing to more than 6%. Construction, services industries such as commerce, restaurants and hotels, and transportation are the most affected areas, the analysts said.
These sectors are most vulnerable to investment and growth expectations, they said. Scotiabank estimates financial services to decrease 3.9%; hotel and transportation to fall 13.2% and 9.7% respectively.
The weak outlook is based on President Andres Manuel Lopez Obrador’s lack of an articulated plan for the reopening of the economy and for pushing projects such as the Dos Bocas Refinery, the Santa Lucia Airport and the Maya Train, the paper said.