Citibanamex revised downwards its estimates on the growth that Mexico will reach during the 2025after the Donald Trump victory in the United States presidential elections.
This was established by the bank in its daily Economic Report, in which it even indicated that due to the result of the United States elections, Mexico will have minimal growth in 2025.
But why Citibanamex reduced its estimates on the Gross Domestic Product (GDP) in the country after the Donald Trump victory? We tell you the details of the report.
Donald Trump wins the 2024 elections in the United States (Alex Brandon / AP)
Citibanamex predicts that Mexico’s GDP will grow very little in 2025 after Donald Trump’s victory
After the Donald Trump victory in the elections for the presidency of the United States, Citibanamex predicted that the GDP of Mexico will have a minimal growth during the 2025.
In this regard, the financial analysts of the banking institution, Paulina Anciola and Guillermina Rodríguez, pointed out in the report that Donald Trump’s victory deteriorates prospects from Mexico.
The above because they highlighted that the result of the electoral contestcaused a series of effects that are adverse for the country, as in the case of the following:
- US stock markets rose
- Treasury bond yields also rose
- The dollar strengthened
- The peso registered high volatility, which at the moment reached a maximum of 20.80 pesos per dollar
By continuing with the exposition about what will happen in Mexico due to the Donald Trump victory, Citibanamex He stated that in his report that the peso could fall even further against the dollar.
Regarding this, the financial institution stated that at the end of this 2024the exchange rate could be placed in positive territory by locating at 19.7 pesos per dollar.
However, he warned that the negative effects would lead the national currency to loss area during 2025since it predicted that it would be placed at 20.4 pesos per dollar.
Although the changes in Citibanamex’s outlook for the exchange rate were in favor of the peso, the forecast balance is negativesince it considers that in 2025 the dollar will gain ground.
In what corresponds to inflationthe bank’s analysis establishes that while in its projection original placed the index at 3.8 percent by 2025, the revision puts it by 3.9 percent.
Mexican peso-dollar exchange rate (Chrysanthemum Espinosa Aguilar/Quartoscuro)
Interview with Paulina Anciola, Financial Analyst at Citibanamex
Time.news Editor: Welcome, Paulina Anciola! Thank you for joining us today. Given the recent report by Citibanamex regarding Mexico’s GDP growth prospects in 2025 following Donald Trump’s victory in the U.S. presidential elections, could you start by summarizing the key reasons behind your downward revision of the growth estimates?
Paulina Anciola: Thank you for having me! The main factors driving our downward revision are the adverse economic effects triggered by Trump’s election. Specifically, we are seeing rising U.S. stock markets and treasury yields, which typically indicate a more favorable environment for U.S. investors, but a more uncertain landscape for Mexico. This environment leads to a strong dollar and increased volatility in the peso.
Time.news Editor: That makes sense. You mentioned the volatility of the Mexican peso reaching a high of 20.80 pesos per dollar. How do fluctuations in the currency affect Mexico’s economy, particularly in a year projected for minimal growth?
Paulina Anciola: High volatility creates uncertainty for businesses and investors. A fluctuating peso can raise the costs of imports, leading to inflation, which affects consumer purchasing power. Additionally, when the peso weakens, it could deter foreign investments as investors may seek more stable options. This cycle can inhibit economic growth and create a challenging environment for companies operating in Mexico.
Time.news Editor: It sounds like a precarious situation. In your report, you also indicate positive trends in the U.S. stock market as a contributing factor. Can you elaborate on how U.S. market dynamics have a ripple effect on the Mexican economy?
Paulina Anciola: Absolutely. The U.S. is Mexico’s largest trading partner, and movements in the U.S. stock markets can impact investment flows and consumer sentiment here. When the U.S. markets perform well, some Mexican assets might decrease in attractiveness, leading investors to favor U.S. markets instead. It can also shift corporate strategies, as companies may prioritize operations and investments in the U.S. rather than in Mexico, which compounds the challenges for our economy.
Time.news Editor: Interesting perspective! So, looking forward, what steps should Mexican policymakers consider to mitigate these potential negative impacts and enhance economic resilience?
Paulina Anciola: Policymakers must focus on strengthening economic fundamentals. This includes creating a more attractive environment for foreign investment, enhancing trade agreements, and addressing local economic challenges like infrastructure deficits and labor market issues. Furthermore, diversifying trade relationships and reducing dependency on the U.S. market could be vital for long-term stability.
Time.news Editor: Those are actionable insights, Paulina. as we look ahead to 2025, what are your expectations if these trends continue unchecked? Are there specific sectors of the economy that might be more significantly affected?
Paulina Anciola: If these trends continue, we could see sectors like manufacturing and export-driven industries being particularly vulnerable due to currency volatility and trade dynamics. Tourism may also suffer if economic uncertainty leads to reduced travel. However, sectors less reliant on external markets or that cater to domestic consumption could fare better. It’s crucial to remain adaptable and responsive to these evolving economic conditions.
Time.news Editor: Thank you, Paulina. Your analysis provides valuable insight into the complex interplay between U.S. elections and Mexico’s economic prospects. We appreciate you taking the time to share your expertise with us today.
Paulina Anciola: Thank you for having me! I hope these discussions can help illuminate the issues at hand.