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Manufacturing exports are geographically concen- trated, particularly in border region states such as Chihuahua, Baja California, Coahuila, and Nuevo León. These states are the most economically dy- namic in the country but also the most vulnerable to a slowdown in export demand.
HURRICANE TRUMP
The economy has been admirably resilient in the face of a collapse in oil prices, a global economy in low-growth mode, and a marked fall in the value of the peso. Domestic demand has supported overall GDP growth in the past four years, structural reforms have led to labor market improvements, and the peso’s weakness has helped to boost non-oil export competitiveness. As Peña Nieto recently noted, “In an envi- ronment of uncertainty and financial volatility, Mexico has maintained economic growth and macroeconomic stability.”
In recent months, however, a new cloud of uncertainty has loomed over the economy: the election of President Don- ald J. Trump in the United States. Trump has threatened to slap a 20 percent tax on imports from Mexico to con- struct a massive wall along the border and to renegotiate or scrap NAFTA. The Governor of the Central Bank of Mexico, Agustín Carstens, said in November that if enacted, Trump’s policies would be “like a hurricane” for the Mexican econo- my. A major renegotiation of NAFTA could seriously under- mine the thriving trade in goods among Mexico, Canada, and the United States, a trade that has nearly quadrupled in the last 22 years, reaching a total of US$1.1 trillion in 2016.
A GROWING DILEMMA
One sector in particular that may be impacted by changes to NAFTA is agriculture. At 4 percent of GDP and 13 percent of employment in Mexico, agriculture is still an important
part of the economy. The nation exports nearly US$30 billion in agricultural products annually, primarily to the United States.
Reforms have targeted agribusiness, and total investment is predicted to reach US$1.5 billion in 2017. These funds will largely go toward upgrades in technology and farming prac-
Pacto por México
reforms
% points 0.4 0.5 0.6
0.0 0.1 0.2 0.3 Telecoms
Electricity and gas Petroleum Employment protection Tax structure Legal reform
Additional reforms
Judicial reform Pro-formality reforms Female participation
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