Mexico, Chile to be hurt most as coronavirus batters Latin America -Credit Suisse

MEXICO CITY, (Reuters) - The econo-mies of Mexico, Chile and Argentina will all likely shrink this year while Brazil should expect no growth as the coronavirus pandemic ravages supply and demand around the world, Credit Suisse said in a note to clients.

“All countries in the region will likely suffer adverse supply and demand shocks from trade disruptions and quarantine efforts for likely a considerable part of the first half of 2020,” it said.

Mexico and Chile are likely to be the hardest hit due to “their high dependence on large and affected economies, like the United States and China,” the note said.

Mexico is already grappling with a mild recession and Credit Suisse now forecasts its real gross domestic product (GDP) will shrink 4% this year, compared with a

previous estimate for 0.7% growth.

The new forecast factors in what Credit Suisse described as a “planned” fall in crude output by national oil company Pemex starting in the second quarter due to the steep decline in oil prices.

Credit Suisse expects Chile’s GDP to contract 1.5% this year compared with its earlier forecast of 1.8% growth. Chile is likely to feel the impact of weaker growth in China, one of its top export destinations, the note said.

The bank forecasts zero growth for Brazil, compared with an estimate of 1.4% growth previously; a 2.6% contraction for Argentina compared with its earlier estimate for a 1% contraction. For Venezuela, it now expects GDP to contract 12.5% instead of 8.5%.

Colombia, Ecuador and Peru all had their forecasts for growth cut. Latin American economies could collectively shrink 1.5%, which Credit Suisse said would be the worst outcome since the aftermath of the global financial crisis in 2009.

Worldwide, the number of coronavirus cases has now topped 187,000 while more than 7,400 have died; there have now been more cases and deaths outside mainland China than inside.