Mexico's economy has always had a challenging history, in both its growth and recession periods. Recently, we have seen a drastic change in the value of the Mexican peso (Mexico’s currency) as compared to the U.S. dollar. According to the US Dollar Peso Exchange Rate (USD MXN) Historical Chart, the highest amount the dollar was worth was back in 2020 for $25.45. This year however, it has decreased drastically to $17.96 (Macrotrends, 2023).
Luis De La Morra, President of Flexible Consulting USA stated, “It is convenient for Mexico that the dollar is cheap because it means that my exports will be less expensive; on the contrary, if I export, it will be more expensive. The dollar will continue to rise and fall because it is considered a free float, and it is not something that affects the economy too much.” This shows that the peso’s worth is more likely to rise when there are upcoming holidays in the US since that is when a lot of tourists are more likely to travel and spend money.
Dr. David García Junco, the current CEO of a pet food company in Mexico, mentioned, “We have many interest remittances that have risen a lot and the economy is not growing, we are not using so many dollars, we have a lot of inflation that we have not been able to control, which in the United States is also high, but they have been able to control it a few points.” Along with inflation, we see that there is a lot of corruption in Mexico harming the growth of the economy. For example, you hear about the time where agriculture fields were getting taken over and invaded, making farmers lose their land.
This year, many analysts believe that “nearshoring (the act of transferring part of a company’s production to countries closeby) presents an opportunity for Mexico that, if capitalized, will lead it to exceed all growth forecasts, although it is not the only factor” (Forbes, 2023). If Mexico starts to leave corruption to the side and focuses on the growth of the economy, it can grow to its full potential. Allowing it to later have a chance of being one of the strongest economies in the future. In the Forbes article, Karina Suàrez goes on to state, “For this 2023, market expectations point to a slowdown in growth in Mexico, which would be in a range of 0.3% to 1.8%, according to the most recent Citibanamex survey (Forbes, Translation from Spanish, 2023).” One of Mexico’s biggest allies is the United States. Mexico realizes that whatever happens to the US impacts the Mexican economy. Mr. De La Morra mentions a saying that demonstrates the connection between the countries, “If the United States gets the flu, Mexico gets pneumonia.”