As many parts of the world struggle due to the spread of the coronavirus, Mexico’s economy is about to take a major hit, according to Reuters. In fact, the country’s financial situation could take a 4% in the coming months because of the pandemic currently gripping the world.
“Credit Suisse sharply lowered its forecast for Mexico’s economic performance this year and now expects a 4.0% contraction, according to a note sent to the bank’s clients on Tuesday, adding to a series of downgrades since the coronavirus spread,” as noted by the publication.
The news comes despite the bank actually saying that Mexico’s real gross domestic product, or GDP, was on pace to grow by a “modest 0.7% in 2020,” according to Reuters.
“Credit Suisse said the Mexican government could end up lowering a budget surplus target for this year in order to accommodate more spending to address disruptions arising from the coronavirus outbreak,” as noted by the news service.
The Latin American country’s economy was already struggling in recent months as a result of “uncertainty over the policies of President Andres Manuel Lopez Obrador.”
“Late last week, Barclays investment bank said that the economy in 2020 will likely be weaker than last year, also citing expected coronavirus disruptions. Barclays cut its GDP forecast for Mexico to a contraction of 2% from a prior estimate for 0.5% growth,” according to Reuters.
“We had warned that the previous 0.7% growth forecast was subject to significant downside risks, which appear to be materializing,” the bank said in an interview with Reuters. The forecast comes as GDP in Mexico has already fallen by 1.9% and 3.6% in the first two quarters of 2020.
Meanwhile, things could get even more bleak for the nation (as well as for the U.S. economy) following the closing of the borders between the nations in order to halt any further spread of the coronavirus, according to Dallas News. “Business leaders and residents are bracing for a wrenching economic blow that could be felt far beyond this region,” according to the publication.
This comes after news of President Donald Trump and Canadian Prime Minister Justin Trudeau closing the borders between the two countries up north.