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Biden’s COVID-19 Stimulus Plan Boosts Mexican Economy

By María Fernanda Barría | Wed, 03/17/2021 - 10:07

President Joe Biden aims to implement a package of economic measures that are expected to stimulate the US economy; which will most likely strengthen Mexico's economy as well, said Alejandro Díaz de León, governor of the Bank of Mexico (Banxico) at the 84th edition of the National Banking Convention. According to Díaz de Leon, Joe Biden's monetary policy has had an impact on two fundamental aspects of the Mexican economy: the sending of remittances from the US, which has increased, and the increase in exports, which has also grown as a result of Biden's stimulus package. "We must strengthen Mexico's macroeconomic stability framework," Díaz de León said. "Interest rates have been under upward pressure, especially in emerging economies," he added.

Eduardo Osuna, Director General of BBVA Mexico, was also optimistic about President Biden's measures and projected a higher than 3.2 percent US GDP growth. "In a week, we will be changing the projection, among other things, because of Biden's support plan and the evolution of the vaccination plan we see in the US," he said. President Andrés Manuel López Obrador also assured that the Mexican economy will grow "at least five percent" this year, after a historic drop of 8.2 percent in 2020. 

Banxico cut its benchmark interest rate on February 11 for the first time since September 2020, as a result of the uncertainty generated in the world economy by the COVID-19 pandemic. Since then, annual inflation accelerated to its highest point in February. Díaz de León also pointed out that Mexico's financial recovery will be tackled differently depending on the country's sectors. 

Banxico's board of directors will discuss its following monetary policy on March 25. Gerardo Esquivel, Deputy Governor of the institution, said to El Financiero that the country will emerge from the pandemic stronger than other emerging economies and acknowledged that the Mexican government is benefiting from the US' economic development.

The data used in this article was sourced from:  
El Economista, El Financiero, Banxico, Reuters, EFE, Milenio
María Fernanda Barría María Fernanda Barría Junior Journalist and Industry Analyst