Mexico | Cyclical & structural factors explain a worse relative performance of the economy

Summary

Timid and less timely countercyclical policies, structural lags and problems of uncertainty for investment are behind the greater decline and the prospects for a slower recovery expected for Mexico.

Key points

• Key points:
• The contraction of the Mexican economy in 2020 was more than double that registered by the US economy
• The biggest drop is explained by countercyclical policies much more moderate than in other countries and deep structural weaknesses
• Recovery will be slow, framed by a weak starting point in physical and social infrastructure, coupled with a context of uncertainty for investment
• Addressing structural lags and improving the investment environment are the fundamental challenges to improve prospects after the pandemic
• In the short term, accelerating the vaccination of the population as much as possible represents the most urgent and important task of public policies

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