The IMF forecasts a lower GDP contraction in the Mexican economy - Oradel
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The IMF forecasts a lower GDP contraction in the Mexican economy 

The International Monetary Fund (IMF) forecasted that the Mexican economy will contract by 9% in 2020 due to the crisis arising from the pandemic, an improvement over its previous forecast of 10.5% made in June.

In its most recent article “Mexico: Final Statement by IMF technical staff on the mission of 2020 Article IV,” the Fund predicted that after the 9% decline in 2020, the Mexican economy will grow 3.5% in 2021 and then increase at an annual rate of close to 2% by 2022.

Based on these projections, employment and income are the sectors that will take several years to return to pre-coronavirus pandemic levels, thus making it a growth challenge for the Mexican economy. 

The 2020 forecast improvement was due to a rebound in the manufacturing industry driven by external demand, although it is contrasted by weak domestic demand. This was defined by the Fund as a two-speed recovery, so it does not rule out that large social and economic costs will persist. 

The International Monetary Fund report also suggests that if the COVID-19 vaccine becomes available early in Mexico, it will benefit the Mexican economy, since workers will reenter the market faster than expected and increase economic momentum by boosting business confidence and investments. 

Last June, the IMF forecasted a 9.4% economic contraction for Latin America in 2020, with Mexico declining to 10.5% and Brazil to 9.1%. However, the Fund also improved its forecast for Brazil by reducing its economic decline to 5.8%. 

IMF Recommendations

The IMF recommended setting the stage for a strong recovery that would consolidate long-lasting and inclusive growth. This encouraged authorities to implement a comprehensive package of short-term fiscal and monetary support, with 4.25 percent interest rate cuts by the Bank of Mexico and structured medium-term plans to anchor fiscal sustainability and reforms to boost investment and growth. 

Similarly, it noted that even a macroeconomic reform package could raise real GDP by 4 percent over the medium term and reduce the public debt to GDP ratio. 

The IMF also recommended the national oil company Pemex to partner with private firms in order to obtain capital, necessary technical knowledge, improve its finances and production figures, curb plans to increase refining production, postpone new refineries until it is more profitable to do so, sell non-essential assets and focus resources on more profitable fields.

Oradel Industrial Center seeks to contribute economic growth in Mexico by offering Class A  industrial buildings for manufacturing and logistics companies 10 miles from the border with the US.

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