Despite Trump’s Victory, IMF Shows Confidence in Mexican Economy

Although it did not mention the United States, the bank has urged Mexico to be vigilant against growing "protectionism" in the world.

Mexico

The International Monitory Fund (IMF) has estimated that Mexico’s economy would grow 2.1% in 2016, stating that the North American country has almost bucked the economic storm wreaking havoc elsewhere in Latin America.

Without mentioning the United States, the bank has urged Mexico to be vigilant against growing ‘protectionism in the world’, saying that protectionism could still hurt its economy.

“The country remains exposed to external shocks, including risks of growing protectionism, given its strong financial and trade linkages with the rest of the world,” the bank noted.

To continue growth, Mexico should focus on economic reforms and improving security and the rule of law, IMF has suggested in an article published on its site.

IMF’s viewpoint comes in the wake of Donald Trump’s election as the next U.S. president. Trump has often vowed that he would scrap the North American Free Trade Agreement (NAFTA) and build a wall along the country’s border with Mexico.

Today, private consumption, supported by a rise in remittances and an improvement in labor market conditions, is driving growth in Mexico, with the country’s flexible exchange rate continuing to help the economy adjust to external shocks.

Mexico’s currency, the peso, took a hit as Donald Trump emerged victorious in the presidential election. But the bank has dismissed concern that the weakened currency would hurt the economy further, saying “there is no evidence of second-round effects from the exchange rate depreciation.”

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IMF agrees that Mexico’s economy has slowed down a bit, but it has blamed the slowdown on weakening industrial activity in the United States and decreasing demand for Mexico’s manufacturing exports.

The bank concludes saying it is confident that Mexico’s strong fundamentals and policy frameworks will continue to underpin the economy’s resilience.

“Growth is expected to remain at a similar level in 2017, supported by strengthening external demand,” the bank stated.

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