The IMF has cautioned that Mexico’s economy will take several years to return to pre-pandemic levels of growth, and could experience a severe contraction of 9% this year. To counter this, the organization has highlighted the need for more fiscal and monetary stimulus measures to prop up the economy.

While the IMF has revised its GDP estimates for Mexico higher since the previous forecast for a 10.5% contraction, the coronavirus pandemic has set back economic growth seen over the past decade. The IMF expects the Mexican economy to grow by 3.5% in 2021 and by around 2% in 2022 and beyond.

The IMF observes in its report, “Based on these projections, employment, income and poverty will take several years to return to pre-pandemic levels. Larger temporary near-term fiscal support would alleviate current distress as well as limit lasting economic damage.”

In Q2 2020, the GDP came in at -17.1% QoQ on account of the pandemic and the lockdowns. Mexico’s central bank has forecast a contraction of 12.8% for this year in case the pandemic extends for a longer period of time.