The International Monetary Fund (IMF) is forecasting a deep recession for Latin America and the Caribbean in 2020, with a GDP contraction of 9.4%. Brazil and Mexico, the region’s two largest economies, are dragging down the results as both countries continue to suffer from the Covid-19 pandemic.
The most recent outlook for Latin America and the Caribbean, released on Wednesday, shows a much worse picture of the region’s economies. In its previous forecast, released two months ago, the IMF predicted a 5.2% recession, which already represented the biggest contraction since the Fund started compiling the World Economic Outlook database, in 1980.
The new forecast includes a 10.5% plunge for Mexico, which has lost about a million jobs during the pandemic. The country’s industrial activity plunged nearly 30% in April compared to a year earlier amid its lockdown, according to the Associated Press.
According to the IMF, Brazil’s GDP will shrink by 9.1% in 2020, in what would be the worst tumble on historical records. The previous report by the Fund predicted Mexico and Brazil would contract by 5.3% and 6.6%, respectively.
The multilateral lending agency said in its report that in Latin America, “most countries are still struggling to contain infections.”
Although the figures for the region are the most negative among emerging markets, they go in line with some of the forecasts made by the IMF for developed countries. The outlook report predicts that the United States will contract 8%; and the euro area and the United Kingdom, 10.2%.