CEO José Marcos Ramírez Miguel sees less risk now from revising the regional trade deal, even a “very positive impact” on Mexico’s economy.

Author: Tiziana Barghini

Global Finance: Earlier this year Mexico’s Central Bank revised its 2017 GDP growth expectations upward, and so did Banorte, in the best proof that concerns for the current US administration were too dark and that the impact of any measure that Mr. Trump can adopt is going to be limited for Mexico. What do you expect from the remaining three years of his administration in terms of measures that can impact Mexico’s economy?

José Marcos Ramírez Miguel: The backdrop for the Mexican economy in the past nine months was really difficult, with high levels of uncertainty generated by the stance of the current US administration toward our country. Such a stance made confidence levels erode significantly at the beginning of the year, translating into lower expectations for economic growth. Nevertheless, this uncertainty ebbed away rapidly amid the resilience observed in economic activity, sound macroeconomic fundamentals and the willingness of the Mexican government to continue with fiscal consolidation. Moreover, concerns on NAFTA renegotiation also faded away after the US government announced first that it intended to renegotiate the agreement, not withdraw from it, at least at this point, and published that the US did not intend to include in the negotiation issues regarding market access (i.e., tariffs, quotas, etc.). These reassurances reduced concerns of a disruptive scenario for Mexico’s exporting sector and investment flow in general. In fact, rating agencies (S&P and Fitch) recognized both governments’ fiscal efforts along with the reduced risks coming from the renegotiation of NAFTA by changing the outlook for the Mexican sovereign rating from “negative” to “stable.”


GF: How important is the revision of the NAFTA agreement for Mexico? What can go wrong?

Ramírez Miguel: We believe that NAFTA’s revision will have a very positive impact on economic activity in Mexico. The objectives set forth by each of the three governments are feasible, and it is highly probable that they reach an agreement on all of them. In particular, we believe that the revision of rules of origin will eventually entail higher levels of foreign direct investment in Mexico. Moreover, the introduction of sectors that were not included in the original agreement will also represent new market opportunities for the country. What it is important here is that negotiators favor an approach based on increasing the welfare of the region versus a zero-sum game approach like the US seems to prefer. We believe that this is one of the main challenges of the negotiation.


GF: What are the key financial issues that Mexico faces as a nation?

Ramírez Miguel: Mexico has a sound financial system with well-capitalized banks and enough liquidity to face possible shocks. In the short term, the financial system has to face the possibility of renewed waves of volatility in both domestic and international markets, against a backdrop of central banks around the world tightening monetary policy. In the long term, one of the Mexican economy’s main challenges is to increase bank penetration, which is one of the lowest among Latin American countries. Nevertheless, as a result of structural reforms (financial and labor, among others), banking penetration has already started to improve. Banking penetration to the private nonfinancial sector in 2010 was 12.6% of Mexico’s GDP. Now it has increased to 17.8%. In addition, the nonperforming-loan ratio has decreased substantially, while private credit growth is three times higher than Mexico’s GDP. It is a reality that Mexico has a long way to go to praise itself as a country with a high financial inclusion. However, it is rapidly converging toward that target.                                                                                                                                                        —Tiziana Barghini


This interview took place well before Mexico’s recent natrual disasters. It has been edited for length. The full interview is available on our website at