Mexico: Down, down and down – Rabobank

Mexico was already four quarters into a recession as this year began but in light of the Covid-19 impact globally, in the US and domestically, estimates for GDP growth in 2020 are painting a very gloomy picture, per Rabobank. USD/MXN trades at 23.876.

Key quotes

“We still expect cuts from Banxico and maintain our call for an end of year policy rate of 5.00% but the sharp sell-off in the currency has of course already provided a significant easing impact.”

“We expect the economy to shrink 6.8% in 2020.”

“While activity justifies rapid rate cuts, the potential for inflation to remain sticky makes it a very thin wire to walk as the Mexican economy faces the threat of a prolonged period of stagflation.”