In spite of Mexico-US tensions, I expect further growth of the country's economy, which will be provided by increasing industrial production. The Mexican peso's depreciation will push the external demand for Mexican products, which in turn will make a positive impact on local manufacturing production and exports. Also mining production will continue to support total industrial production growth, as well as construction activity will continue to expand. In sum, my positive outlook on Mexico's economy reflects sustainable growth in the mid-term.
Relations with the US, Mexico's dominant trade and investment partner, will continue to be foreign-policy priority for the country. I think that tension will persist, due to Donald Trump's determination to build a border wall and tighten restrictions on immigration, as well as his rigid position on trade. In addition, I see continuous risk in NAFTA negotiations, which are accompanied by disagreements. In my view uncertainty over NAFTA and Mexico's presidential elections will weaken business and consumer confidence in short-term, resulting in slowdown of capital inflows. Also I don't expect that education and other reforms implemented over the last years will reach their potential, due to weakness of government institutions. Weak public investment, significant dependence on import and high level of poverty (almost 50% of the population) will also impede economic growth. Therefore I have negative outlook for the economic development of Mexico.
In 2017 foreign investments in Mexico fell due to uncertainty relating to USA commitments to NAFTA. This will result in poor growth of GDP for 2018. This goes together with domestic policy uncertainty remains until presidential election on 1st July 2018. After, I would suggest that we may expect pro-American president thus we may expect positive shifts in policy (mainly renegotiation of NAFTA with the USA). Growth in Mexico seems to be moderately higher in 2019 and 2020, at 2.5-2.7 percent per annum but this year 2018 - poor 1.0% - 1.9%