Shop Talk: Mexico’s Economy Could Contract 2.6% Without NAFTA…

The headline says -2.6%, but that’s the median.  The actual 2019 economic predictive modeling for Mexico is up to a 4% contraction if the U.S. cancels NAFTA.  The next round of NAFTA negotiations is scheduled for November 17th.

Additionally, these models are based on current trade economics and do not factor in the ramifications of Mexico joining the Trans-Pacific Partnership; and signing up to manufacturing sector agreements with Asian nations who can easily undercut even the low wage rates in Mexico based on average wealth.

The predictive models are run by various analysts paid by multinational business interests (corporations) to give advanced forecasting.  The results of the forecasts are used by multinational financial systems to determine the inherent value of future investment within Mexico.

As the portends of Nafta’s potential demise grow, economists are busy trying to predict just how bad that could be for the Mexican economy. Santander is the latest. In a note to clients, it examines three scenarios: a transition, a return to WTO rules and an all-out trade war with no WTO rules in force. None is pretty.  (more)

 

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This entry was posted in Mexico, NAFTA, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

81 Responses to Shop Talk: Mexico’s Economy Could Contract 2.6% Without NAFTA…

  1. daughnworks247 says:

    Sundance, I can’t imagine the papers on your desk right now.
    Impressive.

    Liked by 12 people

    • sundance says:

      REMINDER:

      “[…] Our President has been clear about our second objective. NAFTA has resulted in a huge trade deficit for the United States and has cost us tens of thousands of manufacturing jobs. The agreement has become very lopsided and needs to be rebalanced. We of course have a five-hundred billion dollar trade deficit. So for us, trade deficits do matter. And we intend to reduce them.

      Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners on both fronts. We have made some headway on the first objective, but even here we have sometimes seen a refusal to accept what is clearly the best text available in spite of the countries having agreed to it in the past.

      In certain cases, partners who agree to TPP have actually rejected its text here. I would have thought by now we could have cleared chapters dealing with digital trade, telecommunications, anticorruption, and several sectoral annexes, for example.

      As difficult as this has been, we have seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits. Now I understand that after many years of one-sided benefits, their companies have become reliant on special preferences and not just comparative advantage. Countries are reluctant to give up unfair advantage.”…

      https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/october/closing-statement-ustr-robert

      Liked by 27 people

  2. Payday says:

    They may get there a bit differently, but wouldn’t Canada expect the same outcome?

    Liked by 1 person

    • SoCalPatriot says:

      No, they are going to become the world leader for manufacturing socks.

      Liked by 11 people

    • A2 says:

      I would think eventual yes. Mexico, unlike Canada is not a ‘pivot state’ but what Bremmer calls a ‘shadow state’ entirely dependent on one country, in this case the US, for its economy and security. For Mexico, I surmise these multilateral deals is a way to gain advantages, but as sundance points out there is an even bigger downside to TPP. Canada, by contrast, has the Commonwealth and NATO and other trading relationships, but that will not spare them similar outcomes as TPP is a mare’s nest of unenforceable regulations and processes. Those countries will spend more wealth and resources than they gain endlessly fighting trade disputes.

      Liked by 9 people

      • Mexico has mineral resources, tourism and a year-round growing season not to mention indigenous arts and culture. There is no reason other than historic systemic corruption that the Mexican people are not prosperous. The Mexican people need to self examine and then act appropriately.

        Liked by 2 people

        • Lindenlee says:

          The common people here in MX have no power, not even over their local police. They know and see the corruption, but feel helpless to do anything about it. Very tragic.

          Liked by 1 person

        • Carrie2 says:

          Anonymous, the Mexican people have been enslaved first by the evil Aztecs, then the Conquistadores, and then socialist/communist governance and for them to uprise would be very difficult and their culture says let everything ride and that sadly is why they are in the predicament of working for small pay but NEED something or illegally come here and too lazy or ignorant not to apply for coming here legally since they have had way too many years trying to live by lying, hiding, obfuscating. I learned a lot of what they have done and are will to do and most is on the wrong side. Made me happy to then move on to Germany and then back to America, and now see dictatorship here in CA! People no longer seem to have the faculty of thinking!

          Like

  3. A2 says:

    This is what happens when a government, blinded by one dimensional thinking is dominated by multi-national corporations and financial mega banks sold by their well paid lobbyists.

    Liked by 27 people

  4. Curry Worsham says:

    Enrique gonna need a bigger handkerchief.

    Liked by 12 people

  5. To be expected when you have “leadership” that believes in running a country via corruption, graft, bribery, extortion, exporting illegal immigration in order to import U.S. dollars, and a whole cadre of other illegal and immoral practices.

    Serves them right.

    Liked by 11 people

  6. backwoodsgirl123 says:

    International welfare has come to a screeching halt!

    Liked by 15 people

  7. The wall is even making more sense, if NAFTA fails pressure on the border will become more intense. Will Mexico joining TTP will it give American companies more incentive or less to continue to open factories down there? It could be worse for a company, because of individual trade agreements America sets up with each country will give America more control over a level playing field because it can focus on individual Nation behavior. And not have to go to a uncontrollable board of foreign bureaucratic activist mediators.

    Liked by 7 people

  8. blaze says:

    Our local mills here in Colville, Wa. can’t get enough logs to mill. We desperately need log trucks and drivers too. Mills are booming and hiring like we have never seen. I think part due to Trump stopping the importation of cheap Canadian lumber and the growing economy.

    Liked by 26 people

  9. alliwantissometruth says:

    Ah, the beauty of consequences. The scam comes back to slap them in the face

    Liked by 5 people

  10. Matt says:

    Holy moly. As I write, someone named Morales, from Mexico, is on NPR, on the local NYC station, worried that the beer his company produces, will go out of business, Or significantly suffer if they “cancel ” NAFTA”. (Sorry for the run on sentence) But beyond this person’s personal and particular interest, the NPR program has presented globalism as a given, and if NAFTA is ended, more people in these US of A will lose jobs, not gain them!

    Liked by 3 people

  11. Suzanne says:

    I don’t know about anyone else but when I clicked on “read more” right after Sundance’s None is pretty comment I hit a pay wall

    Liked by 1 person

  12. daughnworks247 says:

    This past week is akin to a SuperBowl for economists. Three options for Mexico = A Transition (unknown), a return to GTO rules (difficult for Mexico to maintain compliance), or an all out trade war. Yep, trillions of dollars at stake.
    I like our chances.

    Liked by 9 people

  13. fleporeblog says:

    The Mexican economy is about to come to a screeching halt! We may very easily see another Venezuela 🇻🇪 happening by 2019-2020! Our President maybe able to use DoD funding to get the WALL built because of the chaos that will be occurring across our Southern Border! He can claim that it is in our national interest.

    Liked by 12 people

  14. rsanchez1990 says:

    Is the Mexican government really that dull that they think TPP will make up for NAFTA just because it is a “free” trade agreement? Seems like everyone in the Mexican government is either bought out by the cartels or by globalists. They’re gonna have real problems very soon, especially when they start paying for the wall.

    Liked by 10 people

    • Esperanza says:

      I think the “free” trader’s (not really free but enforced) mask is off. Back in the day these agreements had benefits for consumers which outweighed the bad effects on wages and jobs. Not true any more. I see zero benefit for me. Crap products I can’t buy any way. Also as an environmentalist, horrible for the planet. Shipping dangerous crap half way across the world, manufactured in dirty dirty ways helps humanity how exactly. As I keep saying, buying Chicom cheats two families out of health care and social safety net. The family there and the family here who lost their job.

      Liked by 2 people

      • AM says:

        If you’re an environmentalist, you’re an anti-globalist, too. But so many people who pretend to care about their physical environment clearly have an anti-humanist agenda, rather than genuinely care about people and the earth. It’s only the way to explain open borders and the open market philosophies that tend to go hand in hand with with people who talk about that.

        Like

  15. Wend says:

    Mexico is really good at one thing-visual arts. Amazing visual culture and artistry. It would be nice if there was some way to make it a giant artists’ colony.

    Liked by 2 people

    • John G. McLachlan says:

      Nancy Pelosi:

      “Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance.”

      “But we have to pass the bill so you can find out what is in it, away from the fog of the controversy.”

      Are you suggesting that Mexico should implement Obamacare?

      At least the Mexicans would know what was in the bill, before they passed it.

      Liked by 1 person

  16. Donna in Oregon says:

    Thanks to the Cartels…. Baton Rouge claimed the No. 1 spot for AIDS. Many of the infections there are due to shared needles, since the city is the center of a massive opiate addiction issue.

    Here is the list of the Top Ten:

    https://www.livestrong.com/slideshow/1012576-top-10-states-highest-risk-hiv/#slide=2

    Like

  17. indiamaria2020 says:

    Again….my heart goes out the the poorest of the poor Mexican peasants. Their “leaders” have betrayed them since “La Revolucion” ended in the 1920’s……Liberal/Progressive/Socialist/Commies always harm the very people they rise to power pretending to “help.”

    This is in no way the responsibility of OUR country to fix. But it is a great lesson for our AMERICAN voters. Even if we have a BAD choice to vote on, it behooves us to vote for the LEAST COMMIE of the choices.

    Liked by 3 people

  18. waltherppk says:

    Paying for the wall one way or another would necessarily be an expense for Mexico

    Liked by 3 people

  19. litlbit2 says:

    From Sundance, “Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners on both fronts.“

    A continuation of the mentality of the DNC and GOPe against the folks and President Trump’s agenda MAGA!

    Many slow learners. If you can not win them over, defeat comes to mind.

    Liked by 2 people

  20. thedoc00 says:

    The first bit of the “wall” that needs to be build is digital, to stop or heavily tax all remittance money being send back across the border, by all immigrants.

    Liked by 1 person

  21. Michael says:

    IMO Mexico would greatly benefit from a Saudi Arabia style purge. I’ll go farther and opine that is the only way things are going to change there. The cancer is so deep radical surgery is the only chance for the body of Mexico to survive. I agree as said elsewhere the average Mexican wants the same thing as everyone else. Security and prosperity enough to raise family in peace.

    Like

  22. Moultrie Flag says:

    That photo of Enrique……….he just realized he’s about to fund the biggest, most beautiful wall. The greatest wall in the history of the world….

    Liked by 1 person

  23. tonyE says:

    Aw sh!t! Do we get two more million illegal Mexicans in LA then?

    I think what we ought to do is…. let the illegals move to LA, while us legals move down into Baja and we overrun the place. We make Baja California the 51st state…. and we keep all illegal Mexicans out. Any boat approaching from the Sea of Cortez gets shut down.

    The illegals get to live in the County of LA… it’s all theirs, good luck. They can make Antonio Villaraigosa their Presidente for Life and we’ll see how they treat Maxine Waters….

    Cabrones.

    Like

  24. REAPER says:

    Mexico has never been our “friend”. They aren’t today. Maybe what we should do is invade an take it all north of the 20th parallel. Lots of room to grow and a lot or natural resources . The wall would be much shorter too. The people can stay. We can kill off the drug gangs too. I don’t know how the every day folks would receive an invasion but I think they would find things much better as a US territory. Maybe statehood later.

    Like

  25. William Ford says:

    That big sucking sound you hear … is all the factories and jobs heading out of Mexico and back to the USA after ending NAFTA. About time to correct this mistake.

    Like

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