Experts have warned that Mexico could be the hardest hit of the Latin American countries if the United States enters a full-blow slowdown, causing exchange traded fund (ETF) investors to be cautious.
So far, though, the Mexican economy hasn’t shown signs of slowing. The central bank governor said industrial output and investment is expected to remain at healthy levels. Easter, a major holiday in the country, arrived early this year. That means first quarter numbers might be slightly off when compared with the previous time period in 2007.
Many investors in Mexico believe the central bank will make two interest rate cuts during the second half of the year, report Noel Randewich and Alistair Bell for Reuters. However, a recent inflation spurt has given them less room to move. Growth for the Mexican economy this year is expected to hover around 3%, compared with 3.3% last year. Mexico sells 80% of its exports to the United States, so it’s a country that is heavily dependent on activity here.
So far, the iShares MSCI Mexico Index (EWW) has been benefiting from Mexico’s continued strength. Year-to-date, it’s up 10.4%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.