• PUNCH: The Mexican economy is expected to face a dramatic contraction this year that could amount to up to 7% of GDP according JP Morgan’s latest estimate. This is only the latest in a string of at least 10 different negative GDP forecasts for Mexico published in recent days.
• BIGGER: “We now see GDP collapsing 7%…this year, as activity drops…at a pace not seen in the 2008-09 global financial crisis or the Tequila crisis of 1994-95”, says JP Morgan’s Latin American Emerging Markets Research team amid the coronavirus pandemic.
• REASONS: Among the reasons behind the new estimate for Mexico, JP Morgan cites a larger than expected economic drop in the US, the late arrival of the most intense face of the coronavirus pandemic and a lack of confidence by the private sector leading to capital weakness.
• DOWNGRADE: Also on Thursday, S&P cut Mexico’s sovereign rating to BBB from BBB+, Moreover, S&P also lowered the rating for Pemex (the highly indebted Mexican state-owned oil company) to BBB from BBB+, due to the impact of low oil prices on the company’s business plan.
