Why the Peso Crisis Won’t be “Contained” to Mexico

Get Ready for the NAFTA Hangover

Mexico’s economy has excelled at two key things over the past two decades: opening itself to global capital and attracting foreign direct investment, in particular from American businesses. But those two things could soon become its Achilles heel, especially with Donald Trump seemingly determined to renegotiate, if not scrap altogether, the document most responsible for transforming Mexico into an industrial powerhouse and one of the world’s most open economies, the North American Free Trade Agreement (NAFTA).

Thanks to NAFTA, Mexico has never been so dependent on its northern neighbor. The U.S. accounts for 80% of its exports, 49% of its imports and 60% of all its foreign direct investment. In fact, so intertwined is Mexico’s economy with its northern neighbor that it just became the second biggest exporter to the U.S., overtaking Canada for the first time ever

Continue reading the article at WOLF STREET

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