OECD cuts growth estimates for Mexico due to risks of US protectionist policies
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Mexico’s economy faces “sizable” risks due to renegotiation of NAFTA and other protectionist policies of President Donald Trump, who assumed the presidency in January promising to rewrite the trade deal, the Organization for Economic Cooperation and Development (OECD) revealed today in a report (PDF).
The Mexican peso has recovered recent losses and now trades at levels seen before the U.S. election.
While Mexican investments that have since been put on hold are expected to resume, more turbulence from a protectionist push can’t be ruled out, says to the OECD outlook.
The document points out that Mexican economy is highly open and deeply integrated in regional supply chains.
So far, industrial production, investment and exports have been resilient to the possibility of NAFTA renegotiations or other protectionist measures.
However, “unfavorable policy announcements in this area could derail investment, manufacturing production and exports,” warns the piece by OECD
The organization cut its estimates for the Mexican economy and now expects it to expand 1.9% this year and 2% in 2018.
Trump notified Congress last month about his plans to renegotiate NAFTA, arguing the trade deal has been hurting U.S. competitiveness and jobs.