Adapting Forex Strategies To Mexican Economic Trends

Adapting Forex Strategies To Mexican Economic Trends – Global trade is slowing as the Ukraine conflict and its aftermath replace the pandemic as the leading drag on growth. Trade will grow at a slower average rate than GDP over the next nine years, reversing the trade-led global growth pattern of recent decades. Familiar trade patterns will change not only as a result of the war in Ukraine, but also due to the decline of Western countries’ dependence on Chinese trade and the rise of economic blocs such as the Southeast Asian countries (ASEAN) as companies continue. Diversify their supply chain risk.

World trade will continue to grow, but only at a rate of 2.3% per year through 2031, according to a Boston Consulting Group analysis — lower than the 2.5% annual growth forecast for global economic growth. (See “Trade Methods”)

Adapting Forex Strategies To Mexican Economic Trends

Adapting Forex Strategies To Mexican Economic Trends

The 2022 Global Trade Model is based on an analytical approach that projects global trade in goods from 2022 to 2031. Global Advantage (the global risk advisory group) and X (the firm’s global data and analytics team) established the model early on. 2010, and they continue to improve and refine it on an ongoing basis.

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The model uses ten-year historical data and ten-year forecasts based on correlations between data such as GDP growth, core commodity prices and certain macroeconomic indicators. Raw data inputs for forecasting come from reputable sources such as governments, international financial institutions and economic analysis firms The model’s baseline output covers more than 5,000 product categories in more than 180 exporting countries and 22 sectors. It includes manufactured goods and raw materials; Services are excluded. Trade values ​​are expressed in constant 2021 USD.

Once the baseline is established, the Global Advantage and X teams include adjustments that account for geopolitical events or trends that affect world trade but are not captured by the baseline model. These factors may include impacts such as new trade agreements, trade wars, military conflicts and related sanctions, and climate-related trade policies. The team established coordination scores and applied them, on a percentage basis, to the five-year baseline trade forecast and used this to create a ten-year trade projection.

As economies adjust to changing geopolitical and economic dynamics, with inflation and possible recession in the near term, the resulting shakeup will create new global winners and losers. (See Exhibit 1.)

Overall, the expected changes will weaken the economic globalization and trade opening that characterized the first three post-Cold War decades (1990s to 2010s). In contrast, rising trade tensions and economic nationalism that have emerged in recent years have accelerated during the pandemic and are projected to continue to color global trade relations in the coming decades. In this environment, corporations are diversifying their business relationships to reduce global investment and supply chain risk.

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As Nicholas Lang describes three overarching changes in global trade — what’s driving them and what their effects will be — we’re looking at a complex 2023.

The biggest blow to world trade comes from the military conflict in Ukraine, which will have significant economic ramifications as both the EU and Russia look elsewhere to fill the trade gap created by the breakup. Over the nine years, from 2023 to 2031, the EU will increase trade with the US by $338 billion, driven in large part by US energy exports to Europe, and will also see a huge expansion in trade with ASEAN countries, Africa, and Africa. , Middle East and India. Meanwhile, Russia’s trade with China and India will increase by $110 billion, including $90 billion with China alone.

Adapting Forex Strategies To Mexican Economic Trends

US government efforts to promote domestic manufacturing and encourage companies to diversify supply chains began during the Trump administration and continue under the Biden administration, such as the US Inflation Reduction Act, the US-Mexico-Canada Agreement, and the US CHIPS Act, all of which The aim is to reduce the country’s trade dependence on China.

Asia’s Growing Importance In The Global Economy And Financial Markets

The EU has similarly adopted an increasingly China-wary stance as trade and investment dynamics between the EU and China become more challenging. An escalating wave of tit-for-tat punitive exchanges began in early 2021 with an EU travel ban on Chinese trade officials over allegations of EU forced labor in Xinjiang, followed by the EU’s suspension of ratification of the EU-China Comprehensive Agreement. on investment (signed in December 2020). Lithuania opened a trade promotion office in Taipei following the European Union’s challenge at the World Trade Organization to China’s trade sanctions. As a result, trade growth between the EU and China is cooling, with two-way trade forecast to grow to just $72 billion by 2031, a modest increase compared to growth in previous years and lower than the 2.3% average global growth forecast.

One effect of slowing Western trade with both Russia and China will be a corresponding increase in trade between the North and South regions as countries find new trading partners in Africa, South America and Southeast Asia. The clear winners here are ASEAN countries, which are projected to increase trade to more than $1 trillion by 2031 with new trade—particularly China, Japan, the United States and the EU.

More broadly, the evolving trade map shows relations coalescing around a new East vs. West dynamic—a US- and EU-led bloc and a China-Russia counterpart—with the potential emergence of a third bloc of ostensibly neutral nations. In a modern echo of the neutrality movement of the Cold War days, this group of mostly developing-world countries – including Indonesia and other ASEAN countries, along with African countries such as India, Brazil and South Africa – will find opportunities to step up trade expansion. Trade vacuums created by severance elsewhere.

Some industries will feel global disruptions more keenly than others, with energy being the most affected sector as the West exits from Russian oil and gas and scrambles to replace Russia as an energy source. Pressure on organizations to improve sustainability and increase the use of alternative energy sources will continue to influence corporate energy strategies and operations worldwide. Meanwhile, industries with complex global supply chains – such as semiconductors, automobiles and consumer electronics – will also face difficult transitions as companies take steps to improve resilience and reduce their reliance on Chinese manufacturing.

Mid Year Outlook 2023: Investment Convictions

The relatively secure trade environment that has enabled companies to develop extensive global supply networks over the past 30 years has created a more uncertain path that will demand a new balance and heightened awareness between the traditional objectives of efficiency and low costs on the one hand. Global risks and the measures required to mitigate them on the other hand.

Recent global trade patterns provide clear evidence that many organizations are already prioritizing supply chain resilience and global diversification. In the short term, companies should take several steps to adapt to the evolving global economic situation:

Global trade has been challenged in recent years by protectionism, pandemics and wars. The impact of these forces will affect trade flows around the world for the foreseeable future. Companies that rely on global supply chains should recognize that the challenges facing global trade are here to stay and continue to diversify their networks and build resilience.

Adapting Forex Strategies To Mexican Economic Trends

The Boston Consulting Group partners with leaders in business and society to address their most pressing challenges and capture their greatest opportunities. Pioneered the business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders – helping organizations grow, create sustainable competitive advantage and drive positive social impact.

Oc] Despite Having Much Lower Wages, Mexicans Have Been Paying More Than Americans To Fill Up Their Tanks For Years, Until Now.

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For information or permission to reprint, please contact permissions@ To find the latest content and register to receive e-alerts on this topic or others, please visit Follow Boston Consulting Group on Facebook and Twitter. Our chart this week looks at the global economy and how the UK ranks at the bottom of the IMF’s league table for economic growth in 2023 and 2024.

The IMF reported in its World Economic Outlook update released on 30 January 2023 that it expects global economic output to grow by an average of 3.0% or 2.4% between 2023 and 2024, depending on whether you weight the relative size of each economy in purchasing power parity (PPP ) or using market exchange rates.

While headlines have focused on more immediate prospects for the global economy in 2023 and a

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