Analysts from Wells Fargo, conclude that the Mexican economy will suffer a mild recession in 2017, dropping 1.1% in real terms; affected by the US presidential election. Although they warn that Trump policies are still unknown.
“Mexico is different because President-elect Trump started his U.S. presidential campaign arguing his case to stop illegal immigration from Mexico, deport 11 million illegal immigrants from that country, build a wall to prevent Mexicans crossing north in the future and renegotiate or even end the NAFTA free trade agreement. Thus, even if only part of these promises become a reality, the effects on the Mexican economy are going to be noteworthy.”
“Although President-elect Trump’s policies toward Mexico are still highly uncertain we have tried to identify and look at the sectors of the Mexican economy that have the potential to be negatively affected.”
“We have identified several potential threats to Mexican economic growth: trade agreements and dynamics, but fundamentally foreign investment, remittances, and interest rates and inflation. Although there are some potential benefits, at least in the short to medium term, i.e., a weaker Mexican peso boosting exports, the overall expectation is that its economy will be negatively affected by the new expected policies toward Mexico by the incoming Trump administration.”
“Therefore, we have lowered our forecast for the Mexican economy and now have a mild recession with a decline in GDP of 1.1 percent in 2017 and almost a doubling in the inflation rate for the same year. Still, our forecast depends on a combination of all of these effects and will depend on how far the Trump administration is willing to go to implement his campaign promises. Having said this, because his policies against Mexico were some of the most important drivers of his presidential campaign, we believe an important component of his promises could become reality during the next year or so.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.