Credit Suisse sharply cuts Mexico's 2020 GDP, now sees economy shrinking by 4%

Credit Suisse sharply lowered its forecast for Mexico's economic performance this year and now expects a 4.0% contraction, citing "significant downside risks," according to a note sent to the bank's clients on Tuesday.

Previously, the bank estimated that Mexico's real gross domestic product would grow by a modest 0.7% in 2020. Credit Suisse said the Mexican government could end up lowering a budget surplus target for this year in order to accommodate more spending to address disruptions arising from the coronavirus outbreak.

The bank flagged falling industrial and service output, in addition to an expected fall in crude production from state oil company Pemex triggered by slumping prices, as the main drivers for the downwardly revised estimate. "We had warned that the previous 0.7% growth forecast was subject to significant downside risks, which appear to be materializing," the bank said.