The specialist Gabriela Siller explained that it is possible that in 2020 there will be the second largest decline in the Mexican economy since the Great Depression
The Gross domestic product Mexico’s (GDP) will take at least four years to go back to the levels before the crisis generated by COVID-19, in an optimistic scenario, considered the director of Financial Economic Analysis of Banco Base, Gabriela Siller.
In videoconference, the specialist pointed out that it is possible that in 2020 the second biggest drop of the Mexican economy since the Great Depression, with an estimated contraction between 8.0 and 10 percent.
We believe that it will take at least four years to recover the GDP we had before the financial crisis, thinking that even this year we fell 8.0, 10 or even 14 percent, for the following year the growth rate may be at the best of 1.5 01.7 percent, ”he said.
In this sense, the analyst of the financial institution explained that by 2021 growth rates of 2.0 percent are very difficult in the absence of an expansive fiscal policy by the federal government.
Likewise, Siller calculated that the crisis will cause the loss of between 1 and 1.3 million jobs, so the one that the Recovery depend on this figure, the companies that go bankrupt, the confidence of consumer and business as well as the risk perception about Mexico.
So it would be convenient for Mexico to take the flexible line of credit, support the industries that are being affected the most, such as tourism, entertainment or food, to avoid the massive loss of jobs.
The specialist pointed out that the government can offer loans to companies in these industries, but greater than 25 thousand pesos, conditioned that jobs are not lost.
In fact, he explained that as consumer and business confidence falls, economic activity falls and that reduces tax collection, which makes a cut in the country’s credit rating more likely.
He also indicated that among the risks are a higher debt ratio in relation to the GDP, despite not having an expansive fiscal policy, the expenditure sub-fiscal year, cuts in Mexico’s credit rating, the losses at Pemex.
In addition to higher capital outflows, increases in the exchange rate and transfers to inflation, the increase in structural unemployment, the lack of confidence between consumers and businessmen, and the sharp drop in foreign direct investment in 2020 and lasting until 2021.
With information from Notimex