By Jamie McGeever
BRAZIL, May 5 (Reuters) – The economies of Brazil and Mexico will be contracted by at least 10 percentage points in the second quarter of this year, economists at Capital Economics said on Tuesday, in what are among the bleakest forecasts for Latin. The two most powerful American economies.
In a research note titled “Brazil and Mexico are set for double-digit contraction”, they said the increasingly devastating economic impact of coronaviruses and social isolation measures to combat it would spur unprecedented output cuts.
The Brazilian and Mexican economies are expected to contract by 10% and 14%, respectively, in the second quarter on a year-on-year basis, Capital Economics economist Quinn Markwith told Reuters.
For the 2020 calendar year as a whole, Brazil’s gross domestic product is expected to shrink 5.5% and Mexico 8.0%, he said.
Minutes of Mexico’s latest central bank policy meeting released on Tuesday showed that further rate cuts to prop up a creaking economy are likely, while the Brazilian central bank is expected to cut key lending rates to a new low of 3.25% on Wednesday. (Reporting by Jamie McGeever; Editing by Sandra Maler and Marguerita Choy)