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article imageMexico economy survives Trump's first 100 days

By Yussel GONZALEZ (AFP)     Apr 28, 2017 in Business

The Mexican economy has fared better than expected under the uncertainty caused by US President Donald Trump's first 100 days in office, with GDP up 0.6 percent in the first quarter.

The gross domestic product growth, announced Friday by the Mexican Institute of Statistics (INEGI), slightly beat analysts' expectations of a 0.5 percent boost.

"We anticipated a sharp drop in investment and economic activity, which didn't happen," BBVA Bancomer chief economist Carlos Serrano said.

Last year, Serrano predicted a recession if Trump were to have carried out election promises such as abandoning the North American Free Trade Agreement, or NAFTA, and seizing remittances sent from Mexicans in the United States back home, in order to finance the construction of a wall on the Mexican border.

Many Mexican families rely on those funds, which provide one of Mexico's main foreign exchange inflows. They reached a record $26 billion last year.

Trump said on Wednesday that the United States would not leave NAFTA "at this time" after he held phone conversations with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau.

The leaders would "bring NAFTA up-to-date through renegotiation" instead, he said.

The three countries have agreed to start talks as soon as possible over the trade agreement Trump has described as a "disaster" for US jobs.

Mexico's GDP growth was partly driven by a boost in exports, which grew 11.2 percent in the first quarter. Eighty percent go to the United States.

Banks have recently upgraded their forecasts for the rest of the year.

BVA Bancomer now forecasts 1.6 percent growth for 2017 instead of its previous 1 percent. Citibanamex's forecast rose to 1.7 percent from 1.2 percent.

The Mexican government and central bank expect GDP to rise between 1.3 percent and 2.3 percent this year.

But although the Mexican economy is still breathing, "there's still volatility," said Carlos Capistran, chief economist for Mexico at Bank of America Merrill Lynch.

All eyes are now on developments in the negotiations over NAFTA.

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