MercoPress. South Atlantic News Agency

Mexican economy needs two years to reach pre-pandemic levels

Deputy Finance Minister Gabriel Yorio expressed confidence that the economy would pick up in the third quarter

A full recovery of the Mexican economy to pre-pandemic levels could be reached in one to two years so long as no new coronavirus outbreaks strike, a senior official said

Deputy Finance Minister Gabriel Yorio expressed confidence that the economy would pick up in the third quarter, and stressed that recovery to pre-pandemic levels depends to a large degree on creating and then distributing an effective vaccine for the disease.

The finance ministry forecasts a 7.4% contraction in gross domestic product this year, according to a ministry document released later on Thursday, compared with a 2% expansion that was previously estimated in the government’s 2020 budget.

In a virtual presentation, Yorio confirmed that conornavirus lockdowns have depressed tax collections, but said the government still had room to maneuver. He added that issuing new debt to soften the economic blow of the coronavirus lockdowns could be possible in the event of a new wave of infections.

“We hope we don’t need to use that option,” said Yorio.

President Andres Manuel Lopez Obrador has to date pledged to not raise taxes or take on new debt, arguing that his government can manage the pandemic and other priorities with existing resources, rooting out corruption and cutting spending elsewhere.

According to ministry document, the government projects that by the end of 2020 the peso currency will trade at 22.1 pesos per U.S. dollar.

It also sees Mexico’s oil production at 1.744 million barrels per day by the end of the year, at an average price of US$ 34.4 per barrel for the country’s export basket.

Mexico’s economy contracted by more than 17% in the second quarter as the coronavirus pandemic shut factories, kept shoppers and tourists at home and upended trade, according to preliminary figures from national statistics agency INEGI earlier on Thursday.