Background on Donald Trump and His Trade Policy
Donald Trump, the former U.S. President, implemented a trade policy during his tenure that significantly influenced global economic relations. His administration imposed tariffs on various countries, including Mexico, which had ripple effects on international trade and economic growth projections.
Mexico’s Growth Projections Downgraded by Finance Ministry
The Mexican Secretariat of Finance and Public Credit (SHCP) has revised its growth projection for 2025 downwards due to Trump’s trade policies and the ongoing fiscal consolidation efforts. Originally, the growth rate was expected to fall between 1.5% and 2.3%. However, the new projection places the growth rate between 0.5% and 1.5%
Comparison with Other Institutions’ Projections
The SHCP’s revised projection is now closer to market consensus and other institutions’ estimates. For instance, the Bank of Mexico (Banxico) projects a growth rate of 0.6%, while the Organisation for Economic Co-operation and Development (OECD) forecasts 0.4%.
Reasons for the Downward Revision
Trade Policies: According to Rodrigo Mariscal, head of the Economic Planning Unit at SHCP, the primary reason for the downward revision is external factors, specifically the tariffs imposed by the Trump administration. Although Mexico was among the better-positioned countries, global uncertainty was generated.
Fiscal Consolidation: Another factor affecting the economic projection is the expected fiscal consolidation for 2025. The Mexican government has implemented various public spending cuts, including infrastructure investments. Initially, the Requerimientos Financieros del Sector Público (RFSP) were projected to be 3.9% of the Gross Domestic Product (GDP), but they were revised to 4.3% in the 2026 Economic Package.
Édgar Amador Zamora, Mexico’s Finance Secretary, stated that the 4.3% RFSP-to-GDP ratio reflects a fiscal consolidation path. He acknowledged several factors affecting economic growth, which turned out to be lower than anticipated. Nevertheless, he emphasized that Mexico remains on track with its fiscal consolidation strategy.
Key Questions and Answers
- Q: Who is Donald Trump, and why is he relevant in this context? A: Donald Trump is the former U.S. President who implemented trade policies, including tariffs, affecting Mexico’s economic growth projections during his tenure.
- Q: What changes did the Mexican Finance Ministry make to its growth projections? A: The Mexican Secretariat of Finance and Public Credit (SHCP) downgraded its 2025 growth projection from 1.5% to 2.3% to a new range of 0.5% to 1.5%.
- Q: Why were the growth projections revised downwards? A: The primary reasons for the revision are Trump’s trade policies and ongoing fiscal consolidation efforts in Mexico.
- Q: How do Mexico’s revised projections compare to other institutions’ estimates? A: Mexico’s revised projection is now closer to market consensus and estimates from institutions like Banxico (0.6%) and the OECD (0.4%).
