Industrial Sector, The Collateral Damage Of Donald Trump's Protectionist Policies

October 21, 2019 | 5:00 am

The weakness of the industrial sector is a reality not only in Mexico, but in the world, and one of the causes is called Donald Trump.

The protectionist policies promoted by Trump, president of the United States, have been one of the main factors that have weakened the world economy.

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The slowdown in the global economy this year has been marked by the pronounced weakness of manufacturing

Wells Fargo says in a report.

In the case of the euro zone, Germany, the main economic engine of the region, is one step away from the recession, and the manufacturing sector has been contracting for months

In August, manufacturing orders fell 0.3% with adjusted figures, according to the Bureau of Statistics.

Employment in the industrial sector represents approximately 17% of total employment in the euro zone, and for some industrial powers the proportion is even higher, for example, in Germany just over one in five workers is employed in the industry, he says Wells Fargo,

In Mexico, meanwhile, the uncertainty generated two years ago by the renegotiation of the North American Free Trade Agreement (NAFTA), adds a new factor: the strike of more than 30 days of workers of General Motors (GM ) in United States.

Industrial activity advanced 0.8% in real terms compared to the previous month, based on seasonally adjusted figures, although manufacturing industries declined 0.4%, according to INEGI figures.

Workers in Mexico did not join the strike, but the disruptions will likely have affected the industry in September and will have had a more severe impact this month. GM fired a third of its staff in Mexico on October 1

wrote John Ashbourne and Quinn Markwith, economists at Capital Economics.

They estimate that the direct impact of the strike could reduce total Mexican auto production by approximately 7.5% this month, which would reduce GDP growth by approximately 0.1%. "The impact could be a little greater once we take into account the indirect effects in other parts of the supply chain within Mexico."

In recent days, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said that trade conflicts have caused a "synchronized economic slowdown", so the Fund estimates that 90% of the world will grow slower than estimated this year and by 2020 it estimates that trade conflicts could cost 700 billion dollars of world GDP.

For now, forward, Monex indicates that, manufacturing will have a high sensitivity to the final result of the T-MEC process (formerly NAFTA), being able to register higher rates if it is ratified.

Excellent meetings at W.D.C, c /@USTradeRep reviewing options for resolving democratic claims in good ways p / 🇲🇽; with @RepRichardNeal handing you letter from Pte. @lopezobrador_; c / congressional advisors supporting @STPS_mx Explaining budget #TMEChttps://t.co/ADZVrfdfhq

– Jesús Seade (@JesusSeade) October 18, 2019


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