Mexico Quarterly Update - October 2020
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Mexico's real GDP contracted by -18.7% yoy1 in 2Q20, setting up what we expect to be an -8.4% contraction in 2020. We expect a partial economic recovery of 3.3% in 2021. Fiscal stimulus has been limited so far, and the 2021 budget does not contemplate much more support. The central bank holds plenty of maneuvering space and will likely be aggressive if financial volatility increases. Robust growth in medex was offset by a steep drop in motor premiums, while industry profitability is up owing to improvements in the non-life loss ratio.
Key takeaways:
- We expect a partial economic recovery after a drop of -8.4% in 2020 and growth of 3.3% in 2021.
- Fiscal stimulus has been limited so far, and the 2021 budget does not contemplate much more support.
- The central bank holds plenty of maneuvering space and will likely be aggressive if financial volatility increases.
- Robust growth in medex was offset by a steep drop in motor premiums.
- Industry profitability is up owing to improvements in the non-life loss ratio.
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