Mexican economy harmed by natural disasters

Mexican economy harmed by natural disasters
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Natural disasters that occurred in the summer and early fall in Mexico are being cited as a reason why that nation’s GDP may have contracted by 0.2 percent in the third quarter of 2017.

An online article by Reuters says Mexico’s national statistics agency has calculated that the nation’s GDP shrank by that amount compared to the previous quarter. In the second quarter of 2017, Mexico’s GDP grew by 0.6 percent.

If the preliminary third quarter data proves accurate, “it would be the first quarterly [GDP] contraction since the second quarter of 2013,” according to Reuters.

Hurricanes Katia and Max hit Mexico during the quarter, and two major earthquakes occurred in September, one in central Mexico and the other in the southern Mexican state of Chiapas. Reuters said Mexican statistics agency director Julio Santaella remarked via Twitter that the disasters had negatively affected economic activity.

Other Mexican government agencies have estimated the combination of earthquakes and hurricanes may have caused $2.5 billion in property damage, which should ultimately trigger some economic activity because of rebuilding.

Even with the damage and disruption, the Mexican economy in the third quarter of 2017 grew by 1.6 percent compared to the third quarter of 2016.

Potentially causing further disruption to the Mexican economy, however, is the uncertain future of the North American Free Trade Agreement (NAFTA).

An early November online article by Forbes points to a report by Fitch Ratings that contends the Mexican economy would be the one most negatively affected if NAFTA was abruptly canceled.

“If the United States withdrew from NAFTA, the Mexican economy would face significant uncertainty, which would likely lead to an immediate confidence shock and short-term market volatility,” Fitch analysts led by Arend Kulenkampff say in the report.

The report’s authors state that more than 75 percent of Mexico’s exports are shipped to the United States. Economic growth in the nation would slow in the medium and long term if NAFTA is rescinded, according to the Fitch analysts.

Trade relations between the U.S., Mexico and Canada would revert to World Trade Organization rules, according to Forbes, and a series of tariffs, challenges and arbitration procedures would likely result.

It is unclear how much of the $1.6 billion in goods traded between the three NAFTA countries daily would be affected by an abrupt end to the arrangement.

The Fitch analysts say underlying cost advantages of manufacturing in Mexico would still provide an incentive to locate production facilities there, according to Forbes, unless new tariffs prove prohibitive.

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Source: Recycling Today
Mexican economy harmed by natural disasters
<![CDATA[Natural disasters that occurred in the summer and early fall in Mexico are being cited as a reason why that nation’s GDP may have contracted by 0.2 percent in the third quarter of 2017. An online article by Reuters says Mexico’s national statistics agency has calculated that the nation’s GDP shrank by that amount compared to the previous quarter. In the second quarter of 2017, Mexico’s GDP grew by 0.6 percent. If the preliminary third quarter data proves accurate, “it would be the first quarterly [GDP] contraction since the second quarter of 2013,” according to Reuters. Hurricanes Katia and Max hit Mexico during the quarter, and two major earthquakes occurred in September, one in central Mexico and the other in the southern Mexican state of Chiapas. Reuters said Mexican statistics agency director Julio Santaella remarked via Twitter that the disasters had negatively affected economic activity. Other Mexican government agencies have estimated the combination of earthquakes and hurricanes may have caused $2.5 billion in property damage, which should ultimately trigger some economic activity because of rebuilding. Even with the damage and disruption, the Mexican economy in the third quarter of 2017 grew by 1.6 percent compared to the third quarter of 2016.…