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US fiscal stimulus and recovery to be key to Mexican economy

A recovery in U.S. Gross Domestic Product and the implementation of fiscal stimuli in the US will be key to seeing an improvement in the Mexican economy, said the governor of the Bank of Mexico (Banxico), Alejandro Díaz de León.

The official added that the local economic “bounce” during the third quarter was partly due to better performance in the export sector generated by increased product demand from its main trading partner. “It is very important for everyone, but particularly for Mexico, to recover in the dynamics of the U.S. economy,” Diaz de León said at a virtual conference organized by the International Institute of Finance (IIF).

The head of Banxico added that, after the U.S. election, the likelihood of implementing fiscal stimuli in that nation grew, and that the size and time of that plan will influence Mexico’s hit economy.

In mid-November, the central bank decided to keep its benchmark rate unchanged by 4.25%, following a cycle of eleven consecutive cuts, justifying the pause in which inflation maintained a convergent trajectory to the 3% target.

The Bank of Mexico holder also spoke during his presentation about capital outflows that have affected Mexico since March, which moderated and then were revived in the month before the US election process.

“Our goal is to remain an attractive country to attract investment resources and this is more important for countries more integrated into financial markets,” he said. “Mexico has the second most liquid currency in emerging markets”, he added.

Posted in latin america

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