The Day at a Glance | November 17 2023

*The International Monetary Fund (IMF) renewed Mexico’s Flexible Credit Line (FCL).

*The strike in the US automotive sector negatively affected the industry’s performance during October.

*The United Nations´ Human Rights Chief has requested permission to enter Gaza with his team to investigate allegations related to Al-Shifa Hospital.

*Former US President Donald Trump revealed part of his plan in case he is re-elected, which includes massive operations to deport undocumented immigrants.

Economic environment

Mexico´s Flexible Credit Line (FCL) has been renewed by the IMF for a two-year period. This Thursday, both the IMF and the Exchange Commission – composed of officials from the SHCP and the Central Bank of Mexico – reported the renewal of the FCL for two years, now for an amount totaling 35 billion dollars. It´s worth noting that the FCL is a precautionary instrument that reinforces international reserves – which, as of November 10^th, stood at 205.3 billion USD – and complements the “toolbox” available to local authorities to face adverse external conditions and preserve economic and financial stability. Thus, the approval of the renewal of the FCL stems from the IMF’s assessment that Mexico continues to meet all the necessary qualification criteria to access said resource, if needed. In turn, Mexico´s authorities expressed their intention to treat the new agreement as precautionary, as well as to maintain a cautious policy. However, considering the balance of external risks, the strength of the institutional framework of economic policies, and the commitment to maintaining economic and financial stability, Mexican authorities decided to once again reduce the level of access to the FCL, from the previously agreed 50 billion USD in 2021 and 88 billion USD in 2017. Lastly, the IMF pointed out that Mexico is still exposed to risks, such as renewed volatility in financial markets, increased risk premiums, capital outflows from emerging economies, coupled with economic slowdowns in the US. 

Strikes in the US automotive sector took a toll on the industry in October. Industrial production in the US recorded an annual -0.7% decrease in October, following a monthly rate decline of -0.6%, the largest in four months. Breaking it down, manufacturing production, which accounts for 78% of the industry, declined by -0.7% m/m, primarily because of the strikes in the automotive sector, which dropped by -10%. Additionally, services decreased by -1.6% m/m, and were partially offset by a 0.4% m/m increase in mining.