ECLAC: "Although we expect a rebound by 2021, Mexico's full recovery will not occur until 2025"

In a report presented on Tuesday, the Economic Commission for Latin America and the Caribbean (ECLAC), warned that the consequences of the Covid-19 pandemic will last in the region longer than estimated, a scenario from which Mexico will not escape, and which would only return to pre-pandemic levels in 2025.

In a press conference, Alicia Barcena, Executive Secretary, expanded on the Mexican case by pointing out that there are already signs of economic reactivation in the third quarter of the year, which would allow for the anticipation of economic growth next year by a "rebound" of 3.2%. Nevertheless, she explained that the total recovery "will be very slow and will surely take at least three years to resume economic activity equivalent to 2019," specifying later that this total recovery would be seen towards 2025.

Markets tone down their pessimism regarding Mexican economy in 2020

Bárcena, however, highlighted some positive aspects of the López Obrador government's response to the economic crisis, mentioning the policy of payments to 21 million citizens, including more than 10 million women. "That is an important impulse to consumption".

She also evaluated with optimism other indicators such as the growth of remittances, the trade surplus and the fact that tax revenues have not fallen unlike in other countries: "That gives the Mexican government more room for action," said the ECLAC secretary general.

She also highlighted the recovery of the labor market and assured that the infrastructure plan that the administration announced yesterday is also important, since it involves the creation of 200,000 new jobs, adding that it would be important to open up the labor market to women.

However, she also said that this government needs to make more progress in social protection policies, strengthening stabilizers such as unemployment insurance or the formalization of micro and small businesses.

For the time being, the organization did not make any modifications to its economic projection for Mexico by the end of this year, which is a 9% drop, and warned that, in an early estimate, the growth expectation for 2021 would be 3.2%. This figure is still under review.

Bárcena also stressed that this pessimism is not restricted to Mexico. In her recent study, ECLAC emphasizes that the loterm effects of the crisis due to the pandemic will be greater than expected in the entire region, which will impact growth, unemployment, inequality and poverty.