Pro­tec­tion­ism threat­ens Mex­i­can econ­omy: IMF

Kuwait Times - - BUSINESS -

Pro­tec­tion­ism from abroad threat­ens Mex­ico’s econ­omy, but it is too early to say whether Don­ald Trump’s pres­i­dency will af­fect growth, the In­ter­na­tional Mon­e­tary Fund said Tues­day. Af­ter post­ing 2.5 per­cent eco­nomic growth in 2015, Latin Amer­ica’s se­cond-big­gest econ­omy af­ter Brazil is pro­jected to slow to 2.1 per­cent this year, the IMF said in a re­port, leav­ing its pre­vi­ous fore­cast un­changed. The IMF slightly low­ered Mex­ico’s out­look for 2017, pre­dict­ing the econ­omy will grow by 2.2 per­cent in 2017, a 0.1 per­cent­age point lower than pre­vi­ously thought.

“Mex­ico con­tin­ues to grow at a mod­er­ate pace de­spite a chal­leng­ing ex­ter­nal en­vi­ron­ment,” the IMF said in an an­nual re­port. “How­ever, 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 re­port said. The staff re­port, which was com­pleted four days be­fore the Novem­ber 8 US elec­tion, did not di­rectly men­tion Trump. The Repub­li­can US pres­i­dent-elect wants to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment (NAFTA) and threat­ens to im­pose tar­iffs to pre­vent US firms from out­sourc­ing to Mex­ico.

IMF of­fi­cials said they must wait and see which poli­cies Trump’s administration will adopt be­fore the Wash­ing­ton­based in­sti­tu­tion can re­vise its fore­cast for the Mex­i­can econ­omy. “We need to base our pro­jec­tion of ac­tual poli­cies that will be adopted,” Robert Rennhack, deputy di­rec­tor of the IMF’s Western Hemi­sphere de­part­ment, told re­porters.

“We need to wait and see what the new administration will ac­tu­ally do. Lots of thing are said in the cam­paign, and I think it is im­por­tant to avoid over­re­act­ing to those,” he said. The Mex­i­can peso was rocked by Trump’s vic­tory in the US pres­i­den­tial elec­tion, de­pre­ci­at­ing by about 14 be­tween Novem­ber 8 and Novem­ber 11 on fears that Trump will ful­fill his pro­tec­tion­ist poli­cies. In ad­di­tion to rene­go­ti­at­ing the 22-year-old NAFTA pact with Mex­ico and Canada, Trump, who takes of­fice on Jan­uary 20, an­nounced Mon­day that his administration will with­draw from the 12-na­tion Tran­sPa­cific Part­ner­ship trade deal. —AFP

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