Shop Talk: Mexico’s Economy Could Contract 2.6% Without NAFTA…



The headline says -2.6%, but that’s the median.  The actual 2019 economic predictive modeling for Mexico is up to a 4% contraction if the U.S. cancels NAFTA.  The next round of NAFTA negotiations is scheduled for November 17th.

Additionally, these models are based on current trade economics and do not factor in the ramifications of Mexico joining the Trans-Pacific Partnership; and signing up to manufacturing sector agreements with Asian nations who can easily undercut even the low wage rates in Mexico based on average wealth.

The predictive models are run by various analysts paid by multinational business interests (corporations) to give advanced forecasting.  The results of the forecasts are used by multinational financial systems to determine the inherent value of future investment within Mexico.

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As the portends of Nafta’s potential demise grow, economists are busy trying to predict just how bad that could be for the Mexican economy. Santander is the latest. In a note to clients, it examines three scenarios: a transition, a return to WTO rules and an all-out trade war with no WTO rules in force. None is pretty.  (more)

 

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