Introduction
In the months of January, February, and March, both the US and Mexican economies displayed extremely low growth rates. Similar to the COVID-19 era, where any ailment—be it nail or brain-related—was attributed to the virus, similarly, former President Donald Trump has been blamed for all global woes. In Mexico, voices from both the government and private sector attribute the meager growth to the US’s tariff policies, despite Trump taking office on January 20.
Economic Slowdown in Both Nations
Regardless of the Trump factor, it’s a fact that economic growth in both countries has significantly slowed. This space has previously suggested that Mexico is already in a recession, which could be exacerbated by rising inflation. Unlike the US, which was growing until 2024, Mexico has experienced a consistent downward trend.
Economic Downturns: Normal Cycles or Cause for Concern?
Economic downturns, including recessions, are typically part of natural economic cycles and should not be viewed with alarm. However, prolonged or severe downturns pose problems.
Comparative Analysis: US vs. Mexico
In this current scenario, Mexico has fewer chances of overcoming the impending recession with inflation compared to the US facing a decline. In Mexico, government spending, despite being substantial, has ceased to be a significant driver of economic development. Moreover, the country’s debt continues to rise, coupled with a vastly underdeveloped domestic market relative to foreign trade. Insecurity remains a persistent issue, and legal uncertainty due to the poorly named judicial reform adds to the woes. Dependence on remittances from abroad, particularly from the US, further complicates matters for maintaining internal sales and purchases.
In contrast, the US reported the creation of 177,000 new jobs in April. The country’s economy is the world’s most technologically advanced, with private sector investment increasing by 22.9% in the first three months of the year. The financial system acts as a growth catalyst, and Trump’s economic plan still has two crucial components: aggressive deregulation and corporate tax cuts.
Key Questions and Answers
- Q: Why are both the US and Mexican economies experiencing a slowdown? A: The slowdown is due to various factors, including the ongoing impact of global events like the COVID-19 pandemic and specific policy decisions, such as tariffs in the US affecting Mexico.
- Q: How does the current economic situation in Mexico compare to that of the US? A: Mexico faces more challenges in overcoming its impending recession with rising inflation, while the US shows signs of resilience with job growth and a technologically advanced economy.
- Q: What are the key differences in their economic structures? A: The US has a more technologically advanced economy with robust private sector investment, while Mexico grapples with rising debt, underdeveloped domestic markets, and dependence on remittances.
