The Stability Council of the Financial System of Mexico underscored the economic challenges faced by the COVID-19 epidemic

He Stability Council of the Financial System of Mexico noted on Tuesday that the prospects for the world and mexican economy they have deteriorated as a result of the impact of the coronavirus pandemic and the sanitary measures to contain it.

In updating its balance of risks for the financial system, the Council chaired by the Secretary of the Treasury, Arturo Herrerastressed the challenges that it faces in the wake of the COVID-19 epidemic.

The agency considered that the global and national economic prospects “have significantly impaired”As a consequence of the impact of COVID-19 on the economic activity.

In addition to the effects of the pandemic, the risk of a further slowdown of the global economy and the uncertainty associated with its recovery, as well as an increase in volatility in international financial markets and a recomposition of flows to assets of lower risk, he pointed.

Among the internal factors, “uncertainty prevails over the depth of the contraction of the Economy of mexico and the speed of the recovery, mainly due to the necessary gradualness of the reopening to avoid a growth in the COVID-19 infections“He explained.

It considered as internal risks the additional adjustments to the sovereign and Mexican oil (Pemex) that have been reduced by rating agencies.

Mexican authorities have said they expect a speedy recovery of economic activity after sanitary measures to avoid its spread, although analysts and experts consider that the country may end the year with a drop of up to -10.5 percent in its economy

The Council highlighted that the country’s financial markets had “a better performance in the second quarter ”and that lower interest rates have been observed for government securities, a decrease in risk premiums in addition to the exchange rate appreciated, albeit in an environment of volatility.

He stressed that the financial system of Mexico, as a whole, faced the start of the pandemic in a solid liquidity position and capital, and despite the fact that the situation remains stable, risks persist that could affect its proper functioning.

The Council is made up of the secretary and undersecretary of Finance, the governor and two deputy governors of the Bank of Mexico and the presidents of the National Banking and Securities Commissions, National Insurance and Bonds, National Retirement Savings System and the head of the Institute for the Protection of Bank Savings.

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