Recession alerts are “intensified” in Mexico however with no “deep crisis” | Economy | EUROtoday

The Switzerland agency mentioned Monday that the alerts that Mexico would enter right into a recession have been “intensified” earlier than the tariffs of the president of the United States, Donald Trump, though he dominated out that this implies a “deep” monetary or financial disaster. In its most up-to-date report ‘Mexico: the recession just isn’t a disaster’, UBS mentioned {that a} recession implies a brief deceleration, whereas a disaster entails the collapse of the monetary system, abrupt devaluations of the burden and issues to pay public or company debt. “It is crucial to differentiate between a cyclical recession and a large -scale economic/financial crisis,” reads the doc.

The doc burdened that, in contrast to the previous, Mexico has strong macroeconomic foundations, corresponding to a present account deficit of lower than 0.5 % of the gross home product (GDP), a contained exterior debt and a versatile trade regime. According to the Switzerland agency, these situations considerably cut back the chance of a disaster corresponding to 1994 or that of the Nineteen Eighties.

UBS additionally highlighted the low degree of public debt in international foreign money, equal to simply 30 % of the full, in comparison with 80 % registered three a long time in the past. In addition, he burdened that whole public debt represents 52 % of GDP, beneath the degrees noticed in different economies in Latin America corresponding to Argentina, Brazil or Colombia.

It additionally highlights the versatile credit score line of Mexico with the International Fondomoner (IMF) for 35,000 million {dollars}, supposed solely to nations with accountable macroeconomic insurance policies and added the independence of the Bank of Mexico (Banxico). On the trade fee, UBS estimated that, though industrial uncertainty with the United States might restrict the appreciation of the burden, it doesn’t characterize a systemic danger for the Mexican foreign money. In this regard, it projected a degree of 20.7 pesos per greenback for the second quarter of 2025, one among 20.2 within the third and 20 in the direction of the tip of the 12 months.

This perspective relaxes the considerations indicated by different companies such because the Organization for Economic Cooperation and Development (OECD) that warned a deep recession in Mexico, with a contraction of1.3 % by 2025. Meanwhile, analysts and companies corresponding to Fith Ratings have coincided with the Swiss agency in a zero progress for the nation this 12 months, removed from the minimal progress of two.5 % anticipated by the Mexican authorities.