Volatility of Mexican peso likely to worsen in 2018

2017 ◽  
Keyword(s):  
Free Trade Agreement ◽  
Foreign Minister ◽  
Trade Agreement ◽  
Content Type ◽  
Investor Confidence ◽  
The Past ◽  
The North ◽  
Macroeconomic Fundamentals ◽  
The Government ◽  
Mexican Peso

Significance The peso is depreciating sharply due to renewed uncertainty surrounding the North American Free Trade Agreement (NAFTA). Further volatility may be caused by an acrimonious and uncertain Mexican presidential campaign in 2018. Although macroeconomic fundamentals are solid, the government will need to adopt stabilisation measures in order to stem a loss of investor confidence. So far however, there are no signs that such actions are being considered. Impacts Banxico is unlikely to sell international reserves to stabilise the peso, given the past failure of that strategy. Depreciation may increase inflationary expectations and push Banxico to tighten monetary policy, constraining growth in 2018. The appointment of Foreign Minister Luis Videgaray as Banxico governor would be viewed negatively by the markets. US monetary tightening will narrow the premium Mexico enjoys over US rates, potentially constraining investment into Mexico.

Tight monetary policy to strengthen Mexican peso

2017 ◽  
Keyword(s):  
Monetary Policy ◽  
Free Trade Agreement ◽  
Trade Agreement ◽  
Target Range ◽  
First Year ◽  
Content Type ◽  
The North ◽  
The Us ◽  
Us Government ◽  
Mexican Peso

Significance Banxico justified the move as an attempt to curb inflationary expectations and eventually reduce inflation. It should also boost the peso, making the currency more attractive to investors. Partly thanks to the tighter monetary policy and a programme of foreign-exchange hedge auctions, the peso has strengthened significantly since January 19, the day before US President Donald Trump took office. Also on May 18, the US government sent a letter to Congress to begin officially a 90-day consultation period required before renegotiation of the North American Free Trade Agreement (NAFTA) can start. Impacts Tight monetary policy looks likely to pull the Mexican economy through the turbulence of Trump’s first year. Any US government requests for protectionist measures in NAFTA will rattle the peso. The Central Bank expects inflation to fall back towards the target range by 2018.

Speedy Mexico-EU trade deal promises risks and rewards

2017 ◽  
Keyword(s):  
North America ◽  
Free Trade ◽  
North American ◽  
Free Trade Agreement ◽  
Trade Agreement ◽  
Transportation Costs ◽  
Donald Trump ◽  
Content Type ◽  
The North

Subject Mexico-EU trade talks Significance Talks on modernising the Mexico-EU Free Trade Agreement (FTA) have gained urgency since the election of US President Donald Trump as the prospect of an end to free trade within North America forces Mexican officials to get serious about diversifying relations. While negotiators hope to seal a new EU deal by the end of the year, many issues are yet to be addressed and renegotiation of the North American Free Trade Agreement (NAFTA) is absorbing bureaucratic capacity. Impacts Anti-American sentiment stemming from Washington’s hostility could favour European firms and investors in Mexico. The rush to conclude agreements risks bad deals and political blowback from Mexico’s opposition. Transportation costs and connectivity will ultimately matter more for Mexican diversification than already low tariffs.

NAFTA withdrawal would have extensive economic effects

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Free Trade Agreement ◽  
Public Support ◽  
Trade Agreement ◽  
The United States ◽  
Economic Effects ◽  
Content Type ◽  
The North ◽  
Indirect Impacts ◽  
Deal Making

Subject Outlook for NAFTA. Significance Representatives from Canada, Mexico and the United States completed the fifth round of negotiations on modernising the North American Free Trade Agreement (NAFTA) last month. Most US opinion sees NAFTA as beneficial for the economy, but the administration of President Donald Trump is proposing increasingly unpalatable changes from Mexican and Canadian perspectives. Impacts Political developments in Mexico suggest that it will not cave in to US demands that it considers to be unreasonable. The indirect impacts of NAFTA collapse could be large; supply chain dislocation might raise prices and interest rates, dampening activity. US NAFTA withdrawal could give impetus to other countries' cooperation; Canada and Mexico are part of the ex-US Trans-Pacific Partnership. Trump could lose much public support if he withdraws from the deal, making it much more difficult to pass other legislation. Approaching elections in all three countries in 2018 will add a sense of urgency to the renegotiation process.

NAFTA talks will raise Mexican labour reform pressure

2017 ◽  
Keyword(s):  
Trade Unions ◽  
Free Association ◽  
Trade Agreement ◽  
National Union ◽  
Content Type ◽  
Labour Relations ◽  
The North ◽  
Union Leaders ◽  
The Government ◽  
The Right

Subject Mexico's trade unions. Significance On September 11, the head of Mexico’s main business lobby Coparmex called on Congress to advance several pending issues relating to labour reform before the 2018 elections, including legislation on labour relations, union regulation and collective bargaining contracts. The call comes as the government attempts to resist pressure from Washington and Ottawa to address labour disparities as part of the North American Free Trade Agreement (NAFTA) renegotiations. Impacts Government and business will oppose any NAFTA alterations that might harm Mexico’s comparative advantages. Union leaders will resist strengthening the right to free association, which would allow workers to opt for alternative unions. The Confederation of Workers of Mexico will put pressure on its more than 11,000 affiliated unions to vote for the PRI in 2018. The independent National Union of Workers will call on affiliates to support leftist options. Discontent has increased among unionised workers, who will not necessarily vote along the same lines as the leaders.

Prospects for Mexico and Central America to end-2017

2017 ◽  
Keyword(s):  
United States ◽  
Central America ◽  
Free Trade ◽  
Free Trade Agreement ◽  
Trade Agreement ◽  
The United States ◽  
Content Type ◽  
The North ◽  
And Migration ◽  
Business As Usual

Subject Prospects for Mexico and Central America to end-2017. Significance The economies of Mexico and Central America will maintain a ‘business as usual’ stance until renegotiation of the North American Free Trade Agreement (NAFTA) formally starts later in the year. Growth momentum in the region is therefore likely to be maintained for the rest of 2017. Nonetheless, threats to trade and migration links with the United States, and to remittance income, will drive uncertainty.

Honduras rebound from 2020 recession will be sluggish

2020 ◽  
Keyword(s):  
Free Trade Agreement ◽  
Oil Prices ◽  
Trade Agreement ◽  
Central American ◽  
Economic Recovery ◽  
Content Type ◽  
The Government ◽  
Health Situation ◽  
Increased Activity ◽  
Poor Infrastructure

Significance Hotels and restaurants, private construction and manufacturing suffered the sharpest declines. A gradual reopening of the economy since June should drive increased activity in the second half of the year unless the health situation worsens, forcing the government to back-pedal. Impacts Inflation will remain within the central bank’s target (5.5% plus or minus 1 percentage point) on the back of moderate oil prices. Corruption, violent crime and poor infrastructure will hinder Honduras’s post-pandemic economic recovery. Implementation of the Dominican Republic-Central American Free Trade Agreement will help diversify Honduras’s exports.

Taiwan's security depends on more than military power

2017 ◽  
Keyword(s):  
Free Trade Agreement ◽  
Trade Agreement ◽  
The United States ◽  
Arms Sales ◽  
Content Type ◽  
Defence Spending ◽  
Chinese Military ◽  
The Government ◽  
Military Activity ◽  
National Defence

Subject Taiwan's defence policies. Significance Defence minister Feng Shih-kuan announced last month that the government intends to raise defence spending to 3% of GDP, a 50% increase from 2016, to counter the growing threat from mainland China’s military. Much of that budget will be used for procurement of advanced weaponry from the United States, Taiwan's chief weapons supplier, and to boost the domestic defence industry, including an ambitious plan launched last month to build submarines locally. Impacts Chinese military activity around Taiwan, elevated since President Tsai Ing-wen took office, will probably increase further. Beijing is more likely than previously to direct its anger over arms sales at Taipei rather than Washington. Taipei will seek to expand relations with Washington beyond arms sales, pressing in particular for a free-trade agreement. Taiwan will remain militarily vulnerable no matter how much is spent on national defence.

Sustainable growth initiatives will dampen China’s GDP

2018 ◽  
Keyword(s):  
Free Trade Agreement ◽  
Private Investment ◽  
Trade Agreement ◽  
Sustainable Growth ◽  
Domestic Activity ◽  
Content Type ◽  
The North ◽  
Data Revisions ◽  
Global Demand ◽  
Job Prospects

Significance The economy grew by 6.8% year-on-year in the fourth quarter of 2017, unchanged from the third quarter and taking growth for the whole of 2017 to 6.9%. Growth was led by stronger exports, benefiting from strong global demand in 2017. Domestic activity also contributed, especially services and private investment. Impacts Three protectionist worries could hit Chinese exports: technology transfer, steel imports and the North American Free Trade Agreement. Concerns about local government misreporting and large underreported debt piles will persist and could dampen investment in these areas. Next year the NBS plans to revise its GDP reporting to reconcile national and regional data; revisions to back data could be substantial. NBS plans to report more comprehensive labour market data could raise awareness of poor job prospects, possibly causing popular discontent.

“Let’s Not be Laughed at Anymore: Donald Trump and Japan from the 1980s to the Present”

2018 ◽  
Vol 25 (2) ◽  
pp. 138-168 ◽  
Author(s):  
Jennifer M. Miller
Keyword(s):  
United States ◽  
Free Trade Agreement ◽  
Trade Agreement ◽  
The United States ◽  
Executive Power ◽  
The Past ◽  
Cross Border ◽  
The North ◽  
The Relationship

This article explores the central role of Japan’s rise to global economic prominence in the evolution of Donald J. Trump’s worldview. It traces how the transformation of the relationship between the United States and Japan during the 1980s informed Trump’s ideas about trade and protectionism, globalization, the international economy, and executive power. Trump, it argues, was a product of U.S.-Japanese relationship; while he began his public career as a prominent critic of Japan, claiming that the country exploited American trade and defense policy, his career in real estate heavily relied on Japanese finance. This contradictory approach continues to shape his understanding of Japan. As president, Trump repeatedly condemns Japan as predatory and protectionist, but also seeks expanded Japanese investment in the United States to revitalize the U.S. economy. Equally important, Trump has expanded criticisms originating with Japan to countries like China and Mexico, international agreements such as the Trans-Pacific Partnership and the North American Free Trade Agreement, and the World Trade Organization. By tracing Trump’s rhetorical, financial, and diplomatic encounters with Japan over the past thirty years, this article uncovers the sources of Trump’s contradictory attitudes towards trade, globalization, and cross-border investment and his understandings of strong leadership and executive power.

NAFTA talks will spare North American energy trade

2017 ◽  
Keyword(s):  
Free Trade ◽  
North American ◽  
Oil And Gas ◽  
Trade Agreement ◽  
The United States ◽  
Content Type ◽  
Oil And Gas Producers ◽  
The North ◽  
Energy Trade ◽  
Mexican Peso

Significance As a new round of talks over the North American Free Trade Agreement (NAFTA) looms, the region’s booming energy trade is in the spotlight. Trump’s hard-line rhetoric around the 1994 free trade deal has raised concerns that he will undermine trade between North American nations, which created huge opportunities for energy producers in Canada, Mexico and the United States. Impacts Political uncertainty will dissuade cross-border pipeline investment until greater clarity on US policy is forthcoming. US oil and gas producers and refiners’ reliance on external markets will grow, especially Canada and Mexico. A slowdown in US oil imports from Canada would aid other heavy oil suppliers such as Venezuela and Iraq. Canadian and Mexican exporters will benefit from Trump-driven fluctuations of the Canadian dollar and Mexican peso.

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