Reuters: Mexico could see 'deepest slump' in economy since the Great Depression

After the COVID-19 lockdown,, Mexico's economy could be thrown into "the deepest slump since the Great Depression," with the risk of a 13% contraction in the economy, Reuters reported. 

The Banco de Mexico put together scenarios for Mexico's economy, with the best one projecting the country's economy could be small at the end of 2021 than it was before the COVID-19 pandemic. But forecasts comes with a lot of uncertainty. 

”It is too soon to say when we will return to pre-crisis levels,” central bank Gov. Alejandro Diaz de Leon told Reuters.

The bank predicts in the best-case scenario, the economy will shrink by at least 8.8% by the end of 2020. It also predicts a 5.6% rebound for 2021, but growth would only be 1.3%. 

As long as there are no new COVID-19 outbreaks in the country, the Mexican government said a full recovery could be made in a year or two, Reuters reported. 

Even Latin America's largest economy isn't predicted to contract as much as Mexico's economy. While Mexico's economy could contract by 13%, Brazil's could contract by 9.4%, Brazilian President Jair Bolsonaro said when he launched a fiscal spending program to handle coronavirus pandemic impacts, Reuters reported. 

“Data for the second quarter confirms the Mexican economy had its worst quarterly decline of the last eight decades, after the crash in 1932 caused by the Great Depression,” Alfredo Coutino, an economist at Moody’s Analytics, told Reuters. 

Mexico has been hit harder than most other Latin American countries due to “the absence of stimulus measures to mitigate the effects on companies and families,” Coutino told Reuters. But Mexican President Andrés Lopez Obrador said the country is on the right track to get the economy back. 

“We’re already recovering, workers are already being rehired and we’re going to get out of this without getting over-indebted,” he said during a news conference, Reuters reported. 

Mexico's president said the nation "hit bottom" in April and May, with economic activity increasing by 8.9% in June from the previous month.