The Day at a Glance | December 24 2020

The Top

· Mexican exports record a (-) 1.85% drop in November.

· The United Kingdom and the EU are very close to reaching a Brexit trade agreement, details are expected to be made public within the next few hours.

· Mexico City, State of Mexico, Morelos and Baja California are in a red-light status; they represent almost 30% of the country`s GDP.

· Trump halts fiscal package in the US; Republicans oppose changes proposed by the President.

Economic environment

Mexican exports receded 1.85% during November, even though they maintained 2.3% above their annual comparison. The recovery in exports came to a halt in the year`s second to last month, according to INEGI figures, after a (-) 2.4% fall in non-oil exports and a 14.33% rise in oil exports was recorded. With this, total exports for the first 11 months of the year set at (-) 11.3% compared to the same period of 2019. On the other hand, imports increased 5.95% during the month and set at (-) 3.9% at an annual rate (-17.5% YTD); with an improvement in all goods during November (consumption 17.66% monthly; intermediate goods 4.81%; capital goods 2.32%). This led to a decrease in the trade surplus to 3,032 million dollars, their lowest level since June. The data suggests that there is weakness in foreign demand and a sustained recovery in domestic demand as 2020 comes to its end. However, the last mitigation measures implemented in the country will surely affect the domestic market towards January.

The European Union and the United Kingdom finally reached an agreement yesterday, which determine the rules of bilateral trade once Brexit is carried out on January 1st. Teams maintained intense negotiations in recent days, and according to comments made by officials, a draft version of the agreement with the main details about the trade relationship scheduled to change at the start of 2021 has already been made. Some details regarding European boats` fishing rights in British waters must still be stipulated, particularly regarding the number of species that European fishermen will have access to. According to recent reports, the UK will grant Europe the use of British waters for fishing activities for a 5 year-long transitional period and lose only 25% of access in that period, which allowed unblocking negotiations. It`s unknown how long it will take to specify the last details of the agreement, but once the agreement is finalized it must be approved by PM Boris Johnson and the governments of each one of the EU country members in addition to each block`s legislative chambers. The agreement will end with a process that took over 4 years and political maneuvers to successfully reach a separation voted in 2016 through a referendum.