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LatinNews Daily - 08 January 2021

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In brief: Mexico’s central bank warns of gradual recovery

* Mexico’s central bank (Banxico) has released the minutes of a meeting held by its board of directors, which forecasts that Mexico’s GDP will contract by 9% in 2020, but rise by 3.34%-3.44% in 2021. Most of those present at the meeting warned that economic recovery from the coronavirus (Covid-19) pandemic would be “gradual and prolonged”, while some suggested that it could take “years” for economic activity to recover to the levels seen in the first quarter of 2019. They pointed out that the availability of a vaccine did not change the panorama in the short term, given that some groups will not begin receiving vaccinations until the second half of 2021 - meaning that the impact would last for most of the year. From a longer-term perspective, the report highlighted concerns from some of those present at the meeting about the possible decline in growth potential, citing the evolution of investment and total productivity before the pandemic, as well as the impact of the health crisis, on these variables. The report warned that in the absence of policies which promote private investment and productivity, potential growth would be reduced.