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Mexico's GDP could drop 2.7% if NAFTA is junked, UN commission warns


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Mexico's GDP could drop 2.7% if NAFTA is junked, UN commission warns

Mexico's GDP could fall by around 2.7% if U.S. President-elect Donald Trump follows through with his plan to scrap the North American Free Trade Agreement, Reuters reported, citing comments from Alicia Barcena, executive secretary of the U.N.'s Economic Commission for Latin America and the Caribbean.

"We have estimated that if NAFTA were eliminated in its totality — taking into account second-order effects — the GDP fall could be around 2.7%," Barcena said at a presentation at the commission's headquarters in Chile.

"So there you have some of the risks that could be important, and could even bring the Mexican economy into recession," she added.

Roughly 85% of all Mexican exports in terms of value go to the U.S. and Canada, the two other signatories to NAFTA, the newswire reported. According to the report, Trump's vows to fight Mexico over trade, investment and jobs have led to an increasing number of firms suspending their growth plans in Mexico.

The commission forecasts Mexico's economy to expand 2% in 2016 and 1.9% in 2017.

Earlier in December, Fitch Ratings lowered its outlook on Mexico to negative from stable, saying that Trump's plans to tighten trade and immigration policies have created uncertainty and asset price volatility in the country.

In November, BBVA Research also warned that Mexico could fall into a recession if Trump fulfills his campaign vows to tear up NAFTA and impose high tariffs on certain Mexican exports.