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tices, including irrigation systems, logistics, better storage, and greenhouses. Notes Guillermo Elizondo Collard, the President of Grupo Ceres, a conglomerate with interests in agribusiness, “The government has to bring technology to small farmers with the objective of making them commercial farmers.” Yet produc- tivity remains low and poverty among small farmers is wide- spread. If this is to change, a favorable renegotiation of NAFTA is crucial. Elizondo Collard adds, “The exporting farmer sees the American market as his brand. We just need to bring more pene- tration to that market.”
Trade relationships with the wider world may also be chal- lenged. Mexico has signed the Trans-Pacific Partnership (TPP) free trade agreement, which promises preferential access to six new markets in the dynamic Asia-Pacific region and could reduce export dependence on the North American market. But since Trump pulled the United States out of the TPP, the agreement is in jeopardy.
PESO DOWN, INFLATION UP
In the immediate aftermath of the U.S. election, the peso dropped to historic lows against the dollar. It has since recovered some- what, but U.S. President Donald Trump announced on May 18,
2017, that he was starting the 90-day countdown to begin rene- gotiations for NAFTA, which suggests that a new round of mar- ket volatility could be unleashed later this year.
The weak peso is driving up the price of imported goods, lead- ing to a commensurate rise in the inflation rate. In April 2017, it hit its highest mark in eight years, at 5.82 percent. Governor Carstens called the recent spike “transitory,” but the bank has warned that inflation will likely remain above the official 4 per- cent target for most of the year.
BRACING TO BOUNCE BACK
Between the uncertainties engendered by Trump, the need for further reforms, and shifting patterns of global demand, can Mexico rise to the challenge? President Peña Nieto, for one, is convinced that it can. There are indeed reasons to be cautiously optimistic. The reforms made to date in telecommunications and financial services will continue to boost the economy, and energy reform will start to reap dividends in a few years. While the chal- lenges are real—and uncertainty will keep consumer sentiment subdued—the Mexican economy clearly retains a significant de- gree of resiliency.
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