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Why Mexico’s Economic Growth Is Slowing Gradually

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Mexico’s economic growth

Mexico’s economy showed strong improvements in 4Q16 and 1Q17. However, since 1Q17, the country’s economic growth has been slowing gradually.

In 4Q17, Mexico’s economic growth stood at 1.5% compared to its 1.6% growth rate in 3Q17. Its growth has been slowing gradually. Exports represent an important part of Mexico’s GDP, and the United States is the country’s major trading partner.

On March 1, 2018, President Donald Trump announced that very soon the United States would impose a 10% import tariff on aluminum and a 25% import tariff on steel. As emerging economies Mexico and Brazil are the top exporters of steel to the United States (SPY), this move could hamper Mexico’s economic activity. In spite of huge uncertainty in its political environment and income disparity in its economy, Mexico is trying to pursue improvements in its economic activity.

Performance of ETFs

The iShares MSCI Mexico Capped ETF (EWW), which tracks the performance of the Mexican economy, has shown a weak performance in the past year, falling 0.5%. However, its major trading partner, the United States, has shown an improved performance during the same period, rising 12%.

You may be interested in reading Ray Dalio: US-China Trade War Would Be Devastating.

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