US President Elect - Trump's effect on the Mexican economy?
Healy Consultants Group PLC
05 December, 2016
The shock of the election of e Trump in the United States has rippled through the Mexican economy. The fears related to his negative comments have had a massive effect on the markets, and the Mexican currency pummeled to 13%, the lowest in the past 20 years. Additionally, Trump has made significant threats towards the most important trade deal for Mexico - NAFTA further disturbing the economy.
NAFTA is seen to significantly help the Mexican economy, allowing its goods to smoothly and cheaply reach a very large client base across the Americas. The Mexican Government and its President have been trying to access how much its economy would be affected by changing requirements imposed by the new US president and his team. More than 80% of Mexico's exports are solely manufactured for and distributed to the United States, so a new NAFTA agreement is very lightly to hinder the country's economy in 2017.
The Mexican President has commented that "We are not selling jeans. That is a view of trade that was probably valid in 1992. We are talking about a very dense relationship based on value chains. There is no interest on either side in destroying value,". The value of these exports are reported to be worth more than half a trillion and any change could cause major economic instability.
That said, free zone business in Mexico is noticing a significant boom in foreign direct investments by both international and South American businesses, in particular, for businesses that are centered around manufacturing. Most agree that the country will need to diversify their exports to other countries other than the US in order to remain competitive.
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