With having context switch at every instance, we can see that at one time, both X and Y are in Critical section, and after one such iteration of the while loop either of X or Y depending on the order of context switches, one of them, will move out from The Critical section.
And only one of them will be there forever.
This clearly shows that initially, there was no mutual exclusion as we got one case where both P and Q were in the critical section.
There is essentially no deadlock
But there is no progress and no bounded waiting.