Radical uncertainty, the New norm.

As we close out 2023 I want to begin this last note of the year by thanking my friends, clients, associates and readers for their support these past twelve months. It’s been quite the year, and here at White & Case in Mexico City we’ve worked hard to stay abreast of the issues and maintain your confidence. Along the way, we’ve been fortunate enough to be recognized for our efforts. 

As I have in prior years, I looked back at previous year-end newsletters. It’s clear that words like uncertainty, complexity, and polycrisis dominate. But this year, to quote Ian Bremmer, “the wheels are coming off,” and radical geopolitical uncertainty is the norm, and likely here to stay for the foreseeable future. 

The Ukraine-Russia conflict continues to grind on, while war in the Middle East threatens to involve others in the region. Against that backdrop, tensions oscillate between the US and China, with Beijing’s ambitions in the Pacific and Taiwan never too far from the surface. The combination of these events has exacted a very real human toll, compounded economic uncertainty and brought into sharp focus US political polarization. The sum of which raise questions about the U.S.’s role in the world, especially with Washington currently gripped by negotiations on immigration reform in exchange for funding for our allies. Though, the House did manage to push through the defense bill with bipartisan support yesterday.

On December 13, the US Federal Reserve announced that it would leave interest rates as is for remainder of the year, with economic growth expected to close at 2.1% for 2023. Overall, in 2024 the global economy risks slowing momentum, impacted not only by multiple wars, but also by lingering pandemic stressors. Inflation stubbornly hangs on, though in the United States it has seemingly stabilizedChina’s economic outlook for 2024 has improved slightly, though is expected to slow in the coming year. From a European perspective, RBC expects growth to stall at 0.7% in 2024, up only slightly from 0.5% in 2023. And real concerns center around the debt crisis with dozens of the poorest nations already in default or likely to soon miss payments on the trillions they owe.

To add to the overall sense of foreboding, forty countries will also hold national elections next year, including both the United States and Mexico. While we can’t anticipate the outcomes of all of these elections, we can be certain of additional political transition in the largest election year to date. With the sum of these unknowns, I can’t help but echo academics, investors, and officials alike: the world is facing perhaps its most tumultuous year in a generation.

In June 2024, Mexicans will head to the polls casting their own ballots for more than 20,000 posts, including Mexico’s next president. In the race for president, most third-party candidates have now dropped out with former Foreign Minister Marcelo Ebrard also vowing not to run. Polls continue to show front-runner Claudia Sheinbaum holding a consistent two-digit lead over Xochitl Galvez.

Despite the uncertainty associated with the upcoming elections, Mexico’s economic outlook for 2024 looks relatively stable, given a combination of US demand, government spending, and remittances. BBVA estimates a growth of 2.6% for 2024 with inflation expected to stay under 4%. While Banxico has not yet announced interest rate cuts, analysts are anticipating one early in the new year. On the USMCA front, the US lost its claim on auto parts rules of origin while the panel on GMO corn is set to be decided by March 2024.

US and Mexican officials spent the last months of 2023 tackling a host of bilateral issues. In November, Presidents Biden and Lopez Obrador held a bilateral meeting at the APEC conference expressing a shared desire to tackle irregular migration and drug trafficking. The United States and Mexico also put in a bid to host the 2027 Women’s World Cup. Finally, on December 5, U.S. Treasury Secretary Yellen visited Mexico, making a push for nearshoring to keep China from investing in North American companies.

During her visit, Yellen also announced new sanctions against 15 individuals and 2 Mexican companies linked to fentanyl trafficking. Overall, fentanyl continues to be a priority, and as such, parallel to Secretary Yellen’s visit to Mexico, the Biden administration announced the establishment of a “counter-fentanyl strike force”.  This comes after the U.S. announced sanctions against 13 Sinaloa Cartel members for fentanyl trafficking, and two Mexican men were indicted in Kansas for fentanyl distribution last month.

In early December, Mexican migration director Francisco Garduño announced the suspension of deportations in Mexico, citing a lack of funds. Along similar lines, in December, CBP announced the closure of the Lukeville, Arizona port of entry with CBP officers redeployed to assist Border Patrol agents to process the increasing number of migrants crossing irregularly in Arizona. While announcements from both countries this month show signs of insufficient funding or personnel to manage migration, immigration itself shows no sign of easing in the coming year, and indeed that seems to be the case globally.

On behalf of all of us here at White & Case in Mexico City, I’d like wish you a very happy, safe, and blessed holiday season. May 2024 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 Facebook, Twitter, or LinkedIn


Antonio Garza