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It is time to recapitulate what 2019 left us and what we should focus on in 2020. The year that has just ended left us in terms of the global economy great episodes of volatility marked by commercial issues but also by eternal political-economic novels such as Brexit.
Mexico, Canada and US have reached an agreement to renew the North American Free Trade Agreement (NAFTA) entered into 25 years ago and which president Donald Trump promised to renegotiate during his electoral campaign. It's important to remember that an understanding had already been reached in December of last year.
In The Godfather movies, you can never cease to be surprised at the feeling you get that when the main character knows more than you. That he is one step ahead. This is what Al Pacino makes quite clear when he tells his brother Fredo: “I know it was you” (who betrayed me.)
The world became more complex for all in economic terms because of the increase in trade tensions between the great powers. Uncertainties that negatively affected the financial markets generating great volatilities in the stock markets, as well as in the debt and currency markets at a global level.
With the data available in the third quarter, it is already possible to know that the growth of the Mexican economy in 2019 will be around zero. This is because, as of the last quarter of last year, three consecutive quarters with negative growth were observed, followed by one without growth.
We expect ongoing easing in global uncertainties, and policy support to sustain flows into EMs, mainly those implementing ‘sound’ policies and with stable currencies. However, concerns over underlying vulnerabilities and the potential for further bouts of cross asset volatility will restrain a sharp recovery in EM inflows.
The country only collects 14% of GDP for tax purposes. Not only does this represent the lowest level of all the countries that are part of the Organization for Economic Cooperation and Development (OECD), but it is also lower than the collection levels of most Latin American countries.
The outlook in Latin America in recent weeks has been marked by general elections in Argentina, Bolivia and Uruguay. This is in addition to extensive protests in Ecuador and Chile.