Mexico’s currency was under pressure for the latter part of the U.S. presidential election and throughout the first couple of months following President Donald Trump’s victory. Trump campaigned on a tough trade stance, pushing for the renegotiation of the North American Free Trade Agreement.
Investors were dumping the peso as they weighed the possibility of a trade war with Mexico.
But expectations of a U.S.-Mexico trade war have been subdued, Alanis said. Last month, the U.S. and Mexico reached a deal ending a dispute over the sugar trade between the two countries. The agreement averted U.S. duties on sugar imports from Mexico and retaliatory duties on Mexican imports of American high-fructose corn syrup. The two countries, along with Canada, are expected to begin talks on revamping the NAFTA next month.
Entering 2017, investors and economists believed that the looming threat of a U.S.-Mexican trade war along with a free-falling currency would slow down Mexico’s overall economy. That said, the Mexican economy has proven resilient thus far.
Mexico’s gross domestic product grew 2.6 percent in the first quarter on a year-over-year basis, according to INEGI, the country’s national statistics agency.
“It’s not spectacular growth, but it’s better than people expected,” said Alberto Ramos, head of Latin American Economics at Goldman Sachs. “Towards the end of last year, the consensus was the [Mexican] economy would decelerate a lot, with consensus around the 1 percent handle. Now the consensus has increased and is closer to 2 percent.”