Asian investments could help Mexico weather U.S. recession, says Comce

The investments that some companies are making in Mexico by moving their production from Asia could help the Latin American country weather a possible recession in the United States, the Economic Council for Foreign Trade, Investment, and Technology (Comce) said today.

The private organization’s director, Fernando Ruiz, pointed out that the northern part of Mexico is receiving investment from Asia, especially in auto parts, electronics, and even power generation with equipment such as turbines.

The phenomenon of “relocation,” which has gained importance since the disruption of global value chains caused by the new coronavirus, could help boost Mexican exports, most of which are destined for the United States.

“If there is a recession (in the U.S.), we can protect ourselves from that recession by adding value to our exports,” Ruiz said in a virtual conference.

“We will also benefit from all the new investments that come from semi-finished products, parts, pieces, part of the value chain of the production chain that was in Asia and is now produced in Mexico,” he added.

According to Ruiz’s calculations, Mexican exports will reach US$540 billion in 2022, a 10 percent increase compared to 2021.

By 2023, Mexico’s export growth could slow, Ruiz said, but that all depends on economic developments in the United States, its neighbor, and main business partner.

Analysts agree that the U.S. economy could fall into recession by mid-2023, due to a weakening domestic market, higher interest rates, and a general slowdown in the global economy.

Mexico’s gross domestic product (GDP) rose 4.8 percent in 2021 after slumping 8.2 percent in 2020, the worst performance since the 1930s.

Private analysts surveyed by the Bank of Mexico (Banxico) forecast economic growth of 1.9 percent in 2022.

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