IMF report suggests Mexican Economy under threat of protectionism

Economy - Himanshu Gill - Nov 30,2016

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imf report suggests mexican economy under threat of protectionism

The IMF has slightly lowered Mexico’s outlook for 2017, predicting the economy will grow at a rate of 2.2% due to a rising protectionism from abroad.

Protectionism stands for the economic policy of restraining across the border trade through methods such as increasing taxes on imports and imposing other regulations. Mexico is adopting protectionist policies in order to protect its domestic producers and businessman from compelling foreign competitors.

Protectionism from abroad threatens Mexico's economy, according to the IMF, but it says that it would be too early to say whether Donald Trump’s presidency would have an effect on the country’s growth.

Mexico posted an economic growth of 2.5% in 2015. South America’s 2nd biggest economy after Brazil is projected to slow down to a rate of 2.1% in this year, the IMF said yesterday in a report, leaving its previous forecast unchanged. The IMF’s prediction of economic growth for 2017 stood at 2.2%, 0.1 point lower than previously thought.

The IMF report was completed four days before the November 8 US elections and did not mention the name of any of the Presidential candidates.

The Republican US president-elect, Donald Trump, wants to renegotiate the North American Free Trade Agreement (NAFTA) and threatens to impose tariffs on US companies dealing with Mexican customers. IMF officials said, they have to wait and see which policies Trump's administration will adopt before it can revise its forecast for the Mexican economy.

The Mexican peso was heavily affected by Trump’s victory in the elections, depreciating by about 14 between November 8 and November 11 on fears that Trump will work on his harsh policies on relations with Mexico. A spokesperson from IMF said that, the institution doesn’t want to overreact to whatever Trump said in his campaign and that the IMF will base its projections on new policies.