US economic stimulus package will also help Mexico

The president the United State of America (USA) has signed a new $900 billion COVID relief legislation into law, and now the US economy will get more than a second stimulus check. “The new law renews some government financial assistance already starting to expire, including $300 weekly unemployment checks, an eviction-ban and help for small businesses to cover payroll” said several news outlets so far, but could be more coming.

The approval has created a ripple effect on the economy. Dow Jones Industrial Average, S&P 500, and NASDAQ Composite all reported records highs during the week of the announcement. It is expected to have a bust on consumption and private expenditures.

Moreover, “The House voted Monday (Dec. 28th.) to override President Donald Trump’s veto of the $740 billion defense authorization bill, the first vote to override one of Trump’s vetoes by a chamber of Congress and a dramatic rebuke by Democrats and members of his own party”. If this Bill passes, there will also bust the economy and create condition for a full recovery in 2021 from a bad year (2020) for the US economy.

This will also have a ripple effect on Mexico´s exports to US and help the crippled Mexican economy. But there should be a decisive supported by the Mexican authorities. Support or facilitation of the IMMEX Program, Customs operation, and VAT refunds, could be of the most importance for many Mexican exporters.

Mexican exports already recuperate its pre-pandemic level of USD$40 billion dollars, from $18 billion in May 2020. This is a good signal, and with the new Bill passed, it could be better next year. Moreover, there are new Chinese investor willing to establish manufacturing plants in Mexico to serve the US market and avoid import Tariffs. The opportunity is there, but we will see if the Mexican government make the right moves.

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