On Wednesday, May 19th, the Bank of Mexico (Banxico) presented three scenarios in which the economic contraction would continue at levels not recorded since 1932.
Alejandro Díaz de León, governor of Banxico, explained that the scenarios illustrate the challenge that the pandemic has implied for economic activity in Mexico.
The Banxico contemplates a contraction of between -8 to -12.8 and a growth of between 1.3 to 5.6 next year.
The governor of the Bank of Mexico said that, compared to the economic contractions of the past, the current one is not a suspension of activities or impossibility due to economic weakness or financial crisis, but a self-imposed suspension due to health considerations.
Regarding the economic recovery in the shape of a “U”, Díaz de León explained that the level of activity at the end of 2021 would be below the end of 2019.
The economist added that the COVID-19 pandemic surprised Mexico with a weakness in terms of growth and very marked in terms of investment, not to mention low job creation.
However, he explained, the financial system is strong as financial institutions have greater liquidity than they had in other episodes of adversity.
Alejandro Díaz de León added that Mexico’s great challenge is to boost and accelerate the rate of investment, both public and private so that the economic recovery can be sustained.
Source: El Financiero