Tuesday, January 24, 2017

Trump's Negative Economic Impact in Latin America

The IMF says that Latin America will grow slightly less in 2017 than forecast in October. The new numbers are clearly tied to the Trump presidency.

Some thoughts:

First, Mexico and Central America's forecasts are lower than South America because their economies are based in large part on trade agreements with the United States. Trump has threatened those agreements, of course, but it's very unpredictable.

Second, Mexico is not only lower, but it's supposed to drop to 1.7% in 2017 from 2.2% in 2016. That's pure Trump.

Third, Colombia is expected to grow quickly. This is why it's so critical for the Trump administration to support the Peace Agreement, which is in doubt. Some--how much I don't know--of that growth could be in jeopardy.

Fourth, and this has nothing to do with Trump, is that Venezuela is expected to contract but much less than it has been. I suppose this is related to the expectation of higher oil prices. I wonder whether this "lesser contraction" will be enough to take pressure off the government.


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