“Exports recovered well, and I think the first push will come from the export sector,” said Barclays chief Latin America economist Marco Oviedo. “The big question mark is how domestic consumption and investment does in the third quarter, and if the recovery in the U.S. doesn’t get derailed with the rebound in coronavirus infections.”
U.S. second-quarter GDP shrank at a 32.9% seasonally adjusted annualized rate in the second quarter, the Commerce Department said Thursday. By comparison, the contraction in Mexico translates into an annualized decline of 53.1%.
Even with the gradual reopenings in June, demand is likely to be slow picking up, especially as the pandemic has yet to recede, said Alonso Cervera, chief Latin America economist at Credit Suisse.
“The supply shock may be easing, because business is reopening, but what will persist is the demand shock,” he said. “Even if the restaurant around the corner is open, people may not want to go out because the virus hasn’t gone away.”
Economists polled last week by Citibanamex project that GDP will shrink 9.6% in all of 2020. The International Monetary Funds predicts a 10.5% full-year contraction.