Protectionism Threatens Mexican Economy: IMF

MEXICO CITY, , (UrduPoint / Pakistan Point News - 22nd Nov, 2016 ) - Protectionism from abroad threatens Mexico's economy, the International Monetary Fund said Tuesday, slightly lowering the country's growth forecast for 2017.

The report did not directly mention Donald Trump but the Republican US president-elect wants to renegotiate the North American Free Trade Agreement (NAFTA) and threatens to impose tariffs to prevent US firms from outsourcing to Mexico.

"Mexico continues to grow at a moderate pace despite a challenging external environment," the IMF said in an annual report. "However, the country remains exposed to external shocks, including risks of growing protectionism, given its strong financial and trade linkages with the rest of the world," the report said.

After posting 2.5 percent economic growth in 2015, Latin America's second-biggest economy after Brazil is projected to expand by 2.1 percent this year, the IMF said, leaving its previous forecast unchanged.

The IMF slightly lowered Mexico's outlook for 2017, predicting the economy will grow by 2.2 percent in 2017, or 0.1 percentage point less than previously thought. The Mexican peso was rocked by Trump's victory in the US presidential election, depreciating by about 14 between November 8 and November 11 on fears that Trump will fulfill his protectionist policies.

In addition to renegotiating the 22-year-old NAFTA pact with Mexico and Canada, Trump, who takes office on January 20, announced Monday that his administration will withdraw from the Trans-Pacific Partnership trade deal.

Mexico is a firm backer of the 12-nation TPP, which also includes Canada but has yet to be ratified. The Republican billionaire has also threatened to restrict remittances sent by Mexican migrants to their families in order to finance a massive wall along the US-Mexico border to stop illegal immigration.