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The world is experiencing the deepest recession in the last hundred years. The IMF estimates that the global economy will contract 4.9% in 2020. Many countries will have contractions in the second quarter of this year of between 30% and 40% at annualized rates.
The liquidation process of Banco Ahorro Famsa begins. Consumer loans are no longer driving total private sector financing. Bank deposits reverse the weakness shown since the second half of 2019.
July 1, 2020
Mexico | From 320 to 380 million dollars of additional remittances due to "Mother's Day"
Remittances to Mexico are unstoppable, despite the difficult economic conditions due to the Covid-19 crisis, 3,379 million USD reached Mexico, + 3.0% compared to the same month last year. In real terms, due to the exchange rate depreciation, they grew 23.8%.
The impairment of the employment and income indicators stemming from the COVID pandemic has brought questions about the health of banks. Despite the complexity of the current situation, it should be noted that the fundamentals of the banking system as a whole show strength to face the economic consequences of the pandemic.
Banxico cut the policy rate by 50 bp to 5.0% and surprisingly made significant dovish tweaks to the wording of the statement.
The Institute's reclassification of 116,000 loans to the past-due portfolio, as they were considered to be outstanding, increased delinquency to 14%. This is an accounting change rather than a growing impairment of credit.
Daily data from BBVA Point of Sale transactions show consumption might have bottomed up in April but signals a painful recovery ahead.
Yet, we continue to expect Banxico to cut the policy rate until it reaches c. 0% real levels by year-end ie, 3.0% to 3.5%. The Board’s concerns on the ER should have eased in the intermeeting period.