Mexico's economy has recently faced significant challenges, with a contraction of 0.6% in the fourth quarter of 2024, marking the first decline since 2021. The annual growth rate for the year was a mere 0.6%, raising concerns about a potential recession. In contrast, the U.S. economy grew by 2.3% in 2024, although it also slowed down in the last quarter [25223316].
Despite these economic headwinds, the Mexican peso has shown remarkable stability. Analysts attribute this resilience to various factors, including the robust manufacturing sector and the potential for nearshoring, which could help mitigate some of the adverse effects of the economic slowdown [25223316].
However, the looming threat of tariffs from former President Donald Trump, who plans to impose a 25% tariff on Mexican goods starting January 31, 2025, poses a significant risk to Mexico's economic outlook. This could have a profound impact on trade, as over 80% of Mexico's exports are directed to the United States [bd689360].
In light of these developments, Banco de México may consider adopting a dovish monetary policy to support the economy. The central bank's decisions will be crucial as external factors and the performance of the U.S. economy will play a critical role in determining the future of the peso [25223316].
President Claudia Sheinbaum has expressed confidence in Mexico's ability to navigate these economic uncertainties, emphasizing the importance of the United States-Mexico-Canada Agreement (USMCA) review scheduled for July 2025 as a means to strengthen trade relations [bd689360]. As both nations grapple with these economic challenges, the interplay between domestic policies and international trade dynamics will be vital for shaping the future economic landscape of both countries [06dda8b3].