MEXICO CITY, Aug 26 (Reuters) - Mexico’s economy could contract by almost 13% this year, the central bank warned on Wednesday, after gross domestic product data showed the coronavirus pandemic lockdown threw the country into the sharpest slump since the Great Depression.
Here are some key forecasts and analysis from the Banco de Mexico’s quarterly economic report:
Banxico improved its outlook for employment, saying Mexico could lose between 750,000 and 1.1 million tax-paying jobs in 2020, a decrease from the prior forecast of between 800,000 and 1.4 million. Latin America’s second-largest economy could create between 100,000 and 450,000 jobs next year.
The bank provided three possible scenarios for the economy’s performance in 2020 and 2021, saying a single growth forecast “may suggest a higher level of precision than the current environment or the available information allows.”
In a V-shaped economic scenario, Mexico’s economy will contract by 8.8% this year and expand 5.6% in 2021. In a deep V-shaped scenario, the economy will shrink 11.3% in 2020 and grow 2.8% in 2021. In a deep U-shaped scenario, the economy will contract 12.8% in 2020 and grow 1.3% in 2021.
In its last report, the bank’s worst case scenario had warned of another year of contraction in 2021.
Banxico forecast higher inflation, after also increasing its oulook for consumer prices in the last two quarterly reports. It now puts annual headline inflation at 3.7% and core inflation at 3.8% in the fourth quarter of 2020. For the fourth quarter 2021, headline inflation is seen at 2.9% and core inflation at 2.8%.
TRADE AND PAYMENTS BALANCE
Banxico said for 2020 there could be a positive trade balance of between $3.3 billion and $8.8 billion, equivalent to 0.3% and 0.9% of GDP. It also forecast a current account balance of between -$6.0 billion and $5.0 billion. (Reporting by Anthony Esposito; Editing by Aurora Ellis)
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