According to Moody’s Corporation, while Mexico and Brazil are slowing down, the large Andean economies: Chile, Colombia and Peru, are recovering after a rough patch that lasted a year.
Moody’s analysis group points out that Mexico and Brazil have performed very well because the restructuring of global supply chains has favored what they do best.
In Mexico, these are manufactured goods for export to the United States, and in Brazil, the entire basket of basic market products.
In Mexico’s case, he explains that while its exports to the United States and remittance income are still reaching records, these two key supports for the country’s economy are expected to change as the US labor market gradually slows.
Public spending will also be reduced, as the incoming Mexican administration expects a smaller fiscal deficit.
“Where we expect momentum to continue is on the investment front. While not enough to prevent a broader slowdown, foreign direct investment in Mexico’s manufacturing sector is reaching its highest level in 10 years as global manufacturers continue to look for an alternative to China,” notes Moody’s Analytics.
The upcoming US elections are a source of uncertainty, as if a new administration were to impose high tariffs and more restrictive immigration policies, the consequences for Latin America could be significant.
Republican candidate Donald Trump has spoken out in favor of imposing tariffs of more than 10% on all imports .
The impacts would be most concentrated in Mexico, where reduced U.S. imports, reduced Mexican migration to the United States, and reduced remittances would put the Mexican economy in a bind.
According to estimates, Mexico’s GDP would decrease by almost 0.7 percentage points with this measure.
