Mexico | We estimate a GDP contraction of between 6.0% and 12.0%

Uncertainty persists regarding the duration and real impact of the Covid-19 pandemic in Mexico, the economic effects will depend mainly on the contagion and its duration, the economic policy response and the timing and force of the recovery in the US.

Key points

• Key points:
• Given the paralysis and deterioration of domestic and global economic activity we estimate a GDP contraction of between 6.0% and 12.0%
• Consumption is plummeting due to the extension of social isolation measures and the deterioration of household disposable income driven mainly by job destruction
• Potentially, Mexico could be positioned in an enviable position in the global economy due to both the USMCA and the foreseeable rearrangement of global value chains in the mid to long term
• The prolonged impairment of confidence due to questionable decisions that cast doubt on the government's decision-making process implies a balance of lower levels of investment in the medium and long term
• A sharp contraction in formal employment is anticipated, job destruction may be more than 1 million jobs

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