Mexico’s BRICS Ambition Amidst Economic Uncertainties and Geopolitical Tensions with the US
Last week, a bombshell revelation was dropped by Mzuvukile Geoff Maqetuka, South Africa’s envoy to Russia. According to Eurasia Network reports, 25 countries, including Mexico, are keen on joining the BRICS club. This announcement isn’t just idle chatter; it carries significant weight amidst escalating geopolitical tensions between Mexico and the United States.
BRICS: A Counterweight to US Influence
The current diplomatic spat between Mexico and the United States over immigration, border Website security, and drugs trade has reached an unprecedented level. With the U.S. imposing tariffs on Mexican goods and considering aid cuts, Mexico’s response has been clear: “We’re looking at BRICS, thank you very much.”
Joining BRICS (Brazil, Russia, India, China, and South Africa) would be a significant milestone for Mexico. It would be the first country from South America and the first neighbor of the U.S. to join this influential club, perceived as a counterweight to American dominance.
Mexico’s Economic Woes: Interest Rates and Growth
As Mexico navigates these geopolitical challenges, its economy is grappling with its own set of issues. Its growth rate remains sluggish, with a mere 0.1% increase in the last quarter of 2023. Manufacturing and construction sectors took a hit during this period.
Despite these concerns, there’s some positive news: Mexico’s economy grew 3.2% in comparison to the same time last year. However, its economy remains an outlier among its Latin American peers due to high-interest rates (11.25%). This has led experts like Alberto Ramos from Goldman Sachs to suggest a potential interest rate cut in March 2024.
Struggling Sectors and Future Prospects
The manufacturing, agriculture, construction, and service sectors have all shown signs of contraction, with the first three shrinking by 0.1%. Experts predict a modest growth of 2.4% in Mexico’s GDP for 2024, but a significant slowdown to 1.9% in 2025. Gabriela Siller from Grupo Financiero Base has labeled this as a clear indication of an economy hitting the brakes hard.
Inflation and Trade Relations with the US
On the inflation front, there’s a silver lining: it dropped unexpectedly to 4.45% in early February. This news came as a shock to analysts, who expected a higher inflation rate. Even the core inflation rate saw a surprise dip.
Despite these economic challenges, it’s crucial to remember that Mexico and the United States have deep-rooted economic ties. The U.S. is Mexico’s biggest trading partner, making geopolitical developments between the two countries a cause for uncertainty in their future economic relationship.
With both nations heading towards election years, the road ahead is uncertain, adding to the already complex mix of geopolitical tensions and economic challenges.
