The short-term outlook for Mexican economic and freight growth is dim, but a revamped North American trade deal and expectations for an accelerated shift of factory production from Asia to Mexico provide plenty of opportunity — if the government can help the private sector seize it.
Despite denials from President Andrés Manuel López Obrador, Mexico’s economy is in a recession, Rafael Amiel, director, Latin America and Caribbean economics, IHS Markit, said during a JOC webcast on May 28. Amiel said the outlook for Mexico’s gross domestic product (GDP) is for it to fall more than 10 percent this year, compared with a 7 percent global drop in GDP.
The length and depth of that downturn remain unclear as the COVID-19 pandemic remains unchecked in the world’s 15th largest economy and its largest trading partner, the United States, is also in recession. The country’s “contraction is way below what it was in 2008 and 2009,” Amiel said. “The recession is going to be very deep.”
Mexico’s problems predate the pandemic, however. “Even though the Mexican government does not want to admit that we were in a recession prior to coronavirus disease 2019 [COVID-19], we were and COVID-19 simply accelerated that,” said Erik Markeset, CEO of Mexico City-based supply chain consultancy Tsol.
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