The SAI Report: Mexico & NAFTA (March 2017)


• The Trump administration presented the 2017 Trade Policy Agenda and 2016 Annual Report of the President of the U.S. on Trade Agreements Program to Congress
• The timing for the start of the negotiation of NAFTA has extended as the 90-day formal notification was not given to Congress this month
• Mexican political context might complicate the renegotiation, given upcoming elections and President Peña Nieto’s low popularity.
• The draft letter that circulated to notify Congress of the start of NAFTA negotiations shows a positive tone.
• Trump and Ryan failed to pass the legislation to repeal Obamacare.
• Scandals linking administration with Russia and war in Syria may move NAFTA renegotiation down the priority list.
• President Trump signed two executive orders to tackle trade abuses.
• The Private Sector in Mexico and the U.S. continues to organize.
• Mexico’s response to Trump’s Fiscal Policy.

Mexico- Macroeconomic conditions

• The uncertainty generated by the Trump’s administration has had a negative impact in Mexico’s economic scenario.
• The Global Economic activity Index (IGAE) has been growing moderately and steadily.
• The most dynamic component of aggregate demand is private consumption while the other components, and especially gross capital investment, are growing at a slower pace.
• Retail sales continue to grow and consumer confidence index reaches historic low.
• Employment indicators in Mexico have improved significantly during 2016 and the beginning of 2017.
• Inflation is reaching levels that had not been seen since the 2009 recession.
• The Central Bank is implementing a more restrictive monetary policy to contain second order effects and ensure that the rise in inflation is just temporary.
• The Public Balance is very close to the equilibrium.
• The peso has begun to recover in the past two months.
• Trade Balance showed a surplus in February as a result of a higher growth in oil and manufacturing exports.
• The uncertainty surrounding the new administration in the United States has had an adverse effect on foreign direct investment flows.

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The SAI Report:
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