“Polycrisis,” the new normal.

With the holidays just around the corner, 2022 will soon come to a close.Throughout the past year, I’ve been fortunate to work alongside not only great friends, but also extraordinarily talented attorneys here at White & Case Mexico City. And, across the region, White & Case lawyers have been recognized amongst the very best in Latin America.

As in prior years, I looked back at other end-of-year newsletters, where words like complexity and uncertainty were the norm. I’ve found that perhaps the best characterization of what 2023 has in store to be Adam Tooze’s “Welcome to the world of the polycrisis”.

One year ago, it felt as though we were inching beyond the pandemic.Yet, we continue to live with its lingering repercussions. 

Inflation has remained high, and on Wednesday, the Federal Reserve raised interest rates by 0.5 percent and signaled it will continue to increase rates in 2023 to “tame inflation”. Continuing Russian aggression in Ukraine, uncertainty about China moving away from its Zero COVID policy, and recent signs that China is aligning itself more closely with Russia feed a sense of polycrisis. 

Global growth will likely decline to less than 2 percent in 2023, the weakest growth in over a decade. This is in large part due to economic contractions in the US and Europe as well as slowing growth in emerging economies

Across Latin America, countries are facing political turmoil and low economic growth prospects. In Peru, President Pedro Castillo was ousted after trying to dissolve Congress in order to stave off an impeachment. Chile suffered from violent protests when its new Constitution failed to pass. And Argentina is teeming with hyperinflation and political scandal, although the country will no doubt unite this Sunday to cheer on its national team in the World Cup final

By comparison, the economic outlook for Mexico is stable, particularly in the mid- to long-term. In November, Fitch gave Mexico a BBB- rating, and inflation was the lowest it’s been since May. Remittances from Mexican expats, primarily in the US, continue to reach new historic highs, providing support for the economy. 

Two days ago, Mexico’s Congress approved a “Plan B” reform of Mexican President Andrés Manuel López Obrador’s proposal to weaken oversight of the country’s electoral system. This issue has caught the eye of US editorial boards and provoked the ire of Mexicans across the country.

In the US-Mexico relationship, we’ve seen mounting tension this year over multiple disputes filed under the US-Mexico-Canada Agreement (USMCA)A trade dispute-resolution panel recently made a preliminary ruling in favorof Mexico and Canada who had filed a complaint about car components against the US. Yet, the thornier issues— such as energy and genetically modified corn— remain unresolved. 

On Monday, Mexico submitted proposals aimed at settling a USMCA dispute filed in July by the US and Canada, claiming that López Obrador’s energy policies give preference to state-owned firms. It’s been particularly difficult tomake progress on this issue given López Obrador’s strong ideological positions that remain at odds with USMCA and investor expectations.  

Mexican Foreign Minister Marcelo Ebrard is in Washington DC today to discuss “points of agreement on genetically modified corn” in hopes of avoiding an official US complaint. This comes after Mexico appeared to be moving forward with a ban on imports of genetically modified corn, which would lead to an estimated loss of $74 billion dollars for US companies over ten years. Mexico’s Economic Minister Buenrostro has suggested that Mexico may delay the ban until 2025

Immigration continues to confound officials on both sides of the border. It is possible that the Title 42 expulsion policy will end on December 21 due to a court order, though the Biden administration has appealed the ruling. The administration is reportedly in “intense” negotiations with Mexico over potential measures if in fact Title 42 is lifted. Additionally, this past week saw a mass kidnapping of migrants in northern Mexico and record numbers of migrants crossing near El Paso. And lastly, prospects are dimming for the passage of legislation affecting the future of DACA recipients. 

This year has once again shown that our greatest challenges—including the economy, security, and migration— do not stop at our borders. As I have long believed, the US and Mexico are both made stronger by working together. This partnership was on display on December 12th, when the US and Mexico came together to celebrate 200 years of diplomatic relations

On January 9th and 10th, President Lopez Obrador will host President Biden and Prime Minister Trudeau in Mexico City for the North American Leaders Summit. This will offer another chance to tackle the region’s biggest obstacles and leverage opportunities to create a more prosperous and competitive North America.

On behalf of all of us here at White & Case, I wish you and your family a very happy, safe and blessed holiday season. May 2023 bring peace and joy to you and your loved ones. 

As always, I hope you’ll call on me in the new year and look forward to staying in touch via FacebookTwitter, or LinkedIn


Antonio Garza