Itaú BBA - USMCA approval closer

Scenario Review - Mexico

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USMCA approval closer

Dezembro 12, 2019

The potential approval of the USMCA in U.S. Congress will help reduce uncertainty in the economy.

For the full version with all charts and tables, please open the attached pdf file


• The United States Trade Representative (USTR) and trade negotiators for Canada and Mexico reached an agreement on USMCA changes, with the proposal also accepted by Democrats. Democrat representatives hinted that the USMCA could be voted in U.S. lower chamber as soon as next week. 

• We revised our GDP growth forecast for 2019 to -0.1% (from 0.1%), with economic activity recovering gradually, to 1.1% for 2020. We expect the recovery in GDP to be supported by an improvement in public capital investment execution. On other the hand, the slowdown of the U.S. economy will likely curb exports.

• We expect Banxico to cut its policy rate by 25 bps (to 7.25%) in December and continue to ease its policy rate gradually next year to a level of 6.00%. However, given weak economic activity and a stable exchange rate, and if key inflation risks dissipate (such as USMCA approval in U.S. Congress), we still think an acceleration of the easing cycle at some point is possible.

João Pedro Bumachar
Julio Ruiz

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