Credit Suisse cuts Mexico GDP forecast over coronavirus
Jude Webber reports from Mexico City
Credit Suisse has slashed its GDP forecast for Mexico, telling clients to expect a 4 per cent contraction compared with its previous forecast of 0.7 per cent growth.
In a note to clients, the bank said Mexico and Chile would be worst hit in Latin America from the global coronavirus crisis because they were the most open economies and heavily reliant on the US and China, respectively.
Credit Suisse said it had decided to lower its 2020 real GDP growth forecast for Mexico on expectations of falling industrial and services output.
The bank said it had also factored in production declines by state oil company Pemex, starting in the second quarter, following the crash in oil prices.
It added that it expected the central bank to cut its overnight rate “soon”.
“Finally, on the fiscal front, we think that the government will end up lowering modestly the primary surplus target (0.7 per cent of GDP for 2020) in order to accommodate additional spending, particularly to address social needs arising from the Covid-19 shock,” the bank said.
President Andrés Manuel López Obrador has summoned his cabinet to a meeting. The Treasury’s official 2020 forecast for growth remains at 2 per cent.
Overall, Credit Suisse forecast a contraction of 1.5 per cent for Latin America in 2020, the largest contraction since 2009 when the region contracted 2 per cent.
It is now forecasting no growth for Brazil, a 2.6 per cent contraction for Argentina, 1.3 per cent growth for Colombia, a 1.5 per cent contraction for Chile, a 2.3 per cent contraction for Ecuador, growth of 1 per cent for Peru and a 12.5 per cent contraction for Venezuela.
