Mexican Economy Dependent on US Well-BeingBy Sofía Hanna | Mon, 11/30/2020 - 17:02
In the last virtual conference held by the International Institute of Finance (IIF), one of the main points discussed was the Mexican situation and the factors that could benefit its economic recovery.
"A recovery in the dynamics of the US economy is essential for the whole world, but particularly for Mexico," said Alejandro Díaz de León, Governor of Banxico, at the event. Following the US elections, growth in the US GDP and the implementation of fiscal stimuli will be necessary to benefit the Mexican economy, added Díaz de León according to an article from Forbes. Promoting and maintaining investments is essential, as well as being prepared for any strong hits in the financial market, said the governor of Banxico.
Nowadays, Mexico is the US' largest trading partner and Mexican exports to the US have grown despite COVID-19, as mentioned in an MBN article. According to Reuters, in 3Q20 there was an increase in exports due to a rebound in demand in the US. Mexican President Andrés Manuel López Obrador has also mentioned during his morning conferences that remittances have also been a lifeline for our economy.
There is, however, an uncertainty element to Mexico’s relationship with the US. US President-elect Joe Biden’s way of conducting trade relations with China could be a turning point, as mentioned in an MBN article. MBN reported that following Biden’s win, a new spectrum of possibilities opened in terms of the relationship between the two countries. While the US-China trade war allowed Mexico to grow its position as a trade partner, a reopening in communication between the former two countries could weaken Mexico’s stance.
This is the second time Mexico is entangled in US politics during election time. In an article from Expansión, it is mentioned that Trump used Mexico as part of his campaign in the 2016 election. The country could not get into an argument in this area due to its high economic dependency on the US economy. While Biden has not attacked Mexico directly, his policy could impact the country’s position. However, as mentioned in previous MBN articles, following USMCA, Mexico remains a strong investment destination and many Asian and European countries remain attracted to the country as a doorway to take advantage of the trade benefits USMCA provides.