Mexico's economy to plunge less than feared: central bank
Mexico's pandemic-afflicted economy is forecast to contract by up to 9.3 percent this year, a less severe slump than previously feared, the central bank said. The Bank of Mexico had warned in August that Latin America's secondlargest economy was in danger of shrinking by up to 12.8 percent in 2020.
Economic activity has since shown signs of recovering after an easing of pandemic control measures that had triggered an unprecedented 18.7 percent plunge in the second quarter from a year earlier. Gross domestic product (GDP) rebounded 12.0 percent in the
July-September period from the previous quarter, the most since recordkeeping began several decades ago, according to an official preliminary estimate released last month.
The central bank now foresees a fall in GDP of between 8.7 and 9.3 percent this year. "A high degree of uncertainty remains globally and nationally," Bank of Mexico governor Alejandro Diaz de Leon told reporters.
The country was still facing a "very adverse situation due to the pandemic," he added. In 2021, economic growth of between 0.6 and 5.3 percent is expected, the central bank said.
Mexico has officially registered more than 100,000 coronavirus deathsone of the world's highest tolls.
The government imposed lockdown measures at the end of March and started gradually reopening the economy in June. New restrictions have been introduced in recent weeks in response to an increase in infections and Mexico City authorities have said that the capital is close to entering a new lockdown.
Most stocks rose-continuing this month's vaccine-fuelled markets rallybut traders moved cautiously, with an eye on virus infections across the globe that are forcing governments to impose containment measures.
With at least three inoculations in the pipeline and possibly rolled out within weeks, the general mood on trading floors is upbeat for 2021, but a fresh batch of data out of the US underlined the immediate impact of the disease and the long road ahead for economies. And notes from the Federal Reserve's latest policy meeting warned that the country's recovery would be tougher without a new stimulus package.
Official figures showed applications for jobless aid rose for a second straight week as businesses were hit by a sharp increase in new infections and deaths that have led several major cities including New York and Los Angeles to close bars and restaurants.
The readings gave traders a dose of reality following weeks of fervent buying in reaction to vaccine successes and Joe Biden's election victory.
"The data... suggested that the US recovery was slowing as government support programmes ran off, and that the massive spike in Covid-19 is infecting the real economy," said OANDA's Jeffrey Halley. The crisis elsewhere was laid bare as Britain warned it expects to suffer its heaviest annual slump in more than three centuries, with the economy tipped to shrink 11.3 percent in 2020.
The Dow and S&P 500 ended lower Wednesday after hitting records the day before, while the Nasdaq hit a new all-time high as tech firms-which have benefited from people being forced to stay home-surged.
Asian markets drifted in the morning but moved broadly positive as the day wore on. Tokyo, Hong Kong, Shanghai Seoul, Taipei, Jakarta and Bangkok rose but there were losses in Sydney, Mumbai, Singapore, Manila and Wellington. Still, analysts were positive about the outlook, with UBS Global Wealth Management's Xi Qiao saying: "We believe the market rally can continue from here powered by all the positive vaccine news, more political clarity with a peaceful White House transition and with more stimulus to come.