Mexico’s economy shrank 0.2 percent in the first quarter of 2019 compared with the fourth quarter of 2018, according to data released May 24 by the Mexican Institute of Statistics and Geography (INEGI). However, the figures have not deterred Mexican President Andres Manuel Lopez Obrador, who is aiming to grow the county’s economy by 4 percent during his six-year term.
“There’s going to be more growth, much more growth,” Lopez Obrador said at a press conference Tuesday in Mexico City.
INEGI reports economic activity was the lowest in March, at a 0.6 percent decline.
In an online report by Reuters, a Goldman Sachs economist said strikes and fuel supply disruptions earlier in the year contributed to the first quarter slump. The gross domestic product (GDP) figures, a measure of output in goods and services, caused some economists to lower their 2019 forecasts for Mexico’s growth from above 2 percent to about 1 percent for 2019.
An economist at Capital Economics told Reuters the next few years for Mexico’s economy will be “underwhelming.” The Goldman Sachs economist also noted the bleak outlook was due to the uncertainty of the ratification of the United States-Mexico-Canada Agreement (USMCA).
On May 17, Mexico and the U.S. reached an agreement to eliminate Section 232 tariffs on steel and aluminum imports from Canada and Mexico. The Mexican Ministry of Economy says the decision to eliminate the tariffs “paves the way” for the ratification of the USMCA trade deal, which would boost economic growth and create jobs.
In a message to the Ordinary General Assembly of the National Chamber of the Iron and Steel Industry (CANACERO) May 23, Mexico's undersecretary for foreign trade Luz María de la Mora said the elimination of the tariffs puts the steel industry in a better position to “operate without unnecessary obstacles,” as well as to work to take the Mexican industry to “another level” and achieve economic growth and well-paid jobs.
“At this time, we also see with good prospects the possibility of the ratification of the treaty,” she said.
Canada has taken the first steps towards ratifying the agreement with a motion to introduce the bill to Parliament. Mora said Canada is moving to pass the new treaty by June and in the U.S. the Trump administration is working with Congress to address concerns about the treaty.
“We believe it is important to do an education outreach on what this agreement means” and the “importance for the United States of a commercial partner like Mexico and what it means to have this treaty renewed and modernized for the region as a whole,” Mora said. “This agreement is a positive agreement that allows the region to remain competitive, where Mexico for the United States is its main trading partner, its second export market and its second source of import.”
She added, “I think our trade agenda will be a commercial agenda that will help industries like steel continue to feel a thriving industry and remain a competitive industry.”