By Jamie McGeever
BRASILIA, May 5 (Reuters) - The economies of Brazil and Mexico are set to contract by at least 10 percentage points in the second quarter this year, economists at Capital Economics said on Tuesday, in what are among the most gloomy forecasts yet for Latin America’s two most powerful economies.
In a research note titled “Brazil and Mexico set for double-digit contractions”, they said the increasingly devastating economic impact of coronavirus and social isolation measures to combat it will spur the unprecedented fall in output.
The economies of Brazil and Mexico 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 calendar year 2020 as a whole, Brazil’s gross domestic product is on course to shrink 5.5% and Mexico’s 8.0%, he said.
Minutes of the Mexican central bank’s latest policy meeting released on Tuesday showed that further interest rate cuts to shore up the creaking economy are likely, while Brazil’s central bank is expected to cut its key lending rate to a new low of 3.25% on Wednesday. (Reporting by Jamie McGeever; Editing by Sandra Maler and Marguerita Choy)