TAG: The Americas
Mexico is on track for a GDP growth rate of below 2.4% for the year 2016 according to the International Monetary Fund (IMF), while the Ministry of Finance and Public Credit’s growth estimations for 2016 are between 1.7 and 2.5%. Core inflation is at 3%, a figure that fits the Bank of Mexico’s target of between 2 and 4%. In the US, the Federal Reserve announced an increase of +0.25% from to 0.75 in interest rates before the end of 2016, alongside the election of Donald Trump, a top contributing factor influencing the strength of the Mexican peso. These indicators paint a pic- ture of an economy facing macroeconomic risks including the potential devaluation of the peso, a higher inflation, an expected increase in public debt and rising interest rates.
Emerging markets are in for another turbulent year with the strong US dollar and US President Donald J Trump’s “America First” stance both challenging conventional wisdom in trade and macroeconomic policy.
Much to everyone’s surprise, investors have so far responded to the new reality by embracing hope over fear. Trump’s fiscal stimulus of the US economy, it is said, may well end up boosting global demand and growth.
Optimism was a word seldom used to describe emerging economies in 2016, but this looks set to change with the new year – especially in Peru. Indeed, what we might call a cautious optimism was clearly evinced in OBG’s Business Barometer: CEO Survey, conducted in Peru in the last quarter of 2016, in which more than 40 top-tier CEOs shared their sentiment with us. The results of the survey reflect a buoyant, optimistic, proactive sentiment, already a great start to the year, especially in the current international context.