LSR MEXICO REPORT

Until 2027, Mexicans will be able to recover their income level

Experts say that the health emergency due to covid will have a long-lasting effect, and with it, the recovery of citizens' income will be reflected until 2027

  • NEWSROOM
  • 27/01/2021
  • 18:43 hrs
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Until 2027, Mexicans will be able to recover their income level

The road to economic recovery will be long since a low investment environment will remain. The employment trend will be problematic; With this, the economy will return to pre-crisis levels until 2024, while Mexicans' income could recover until 2026 or 2027.

According to financial specialists from BBVA Mexico, consulted by Milenio, a very slow and incomplete recovery is coming.

According to Carlos Serrano, chief economist of the bank, this year's estimated growth will be 3.2 percent. We see more downside risks because there will be the first half of the year with low economic dynamism due to the confinement measures and the growth of contagions by covid-19, which will cause a drop in mobility and economic activity.

"A growth of 3.2 percent for this year will be an incomplete recovery, in addition to the fact that there are still downside risks to GDP due to contagion levels, the extension of the closure of non-essential activities, and the lag in production, despite to the application of the vaccine".

According to the results of the Mexico Situation analysis for the first half of the year, if the economic contraction of 9 percent in 2020 is confirmed, to reach the same level as before the pandemic, it will be necessary to grow 10 percent in 2021, that is, We are still going to be a long way from pre-crisis levels, so we estimate that GDP can be reached until 2024 and in per capita terms until 2026 or 2027, Serrano explained.

The financial specialist of BBVA Mexico that the health emergency will have a long-lasting effect due to the sharp deterioration in the labor market and the loss of more than one million formal jobs, which may return to the same levels until 2023.

In addition to this, the government's low fiscal response to support companies and families will have a greater weight in the recovery, as it does not have a fiscal policy that would respond to the emergency compared to that of other countries.

The bank's chief economist commented that it is necessary to improve confidence and investment levels in the country to increase employment levels and grant guarantees by the development bank to grant loans for working capital to small and medium-sized enterprises.

"Investment has been weakened by a series of public policy decisions that have generated uncertainty among investors and that had already been resulting in a fall in investment since before the pandemic. If these signs of uncertainty are not reversed, the game rules can change in the middle of the game, this is not going to recover, and therefore jobs will not improve ".



Traducción: Valentina K. Yanes