Mexico Economy Sinks Under Pressure From Trump And Missteps By The Government

Mexico's economy is taking a big hit under pressure from Donald Trump and missteps by its government. The peso is trading at record lows, inflation is rising and citizens are taking to the streets.

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As Donald Trump prepares to enter the White House, Mexico's economy is in turmoil. Its currency fell after Trump won in November. It keeps sliding when he tweets about border walls and trade restrictions. Meanwhile, Mexico's president has cut gas subsidies, causing prices to rise and people to protest. NPR's Carrie Kahn reports.

CARRIE KAHN, BYLINE: Earlier this week, Mexico's president, Enrique Pena Nieto, took to the national airwaves to quash discontent and daily demonstrations over his government's decision to end subsidizing gasoline costs. Looking into the camera, he says the government would have had to make drastic cuts in crucial programs for the poor if it continued the practice and not hiked gas prices.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT ENRIQUE PENA NIETO: (Speaking Spanish).

KAHN: "Here I ask you," he says, "what would you have done?" The answer for many Mexicans was to hit the streets and demand Pena Nieto resign.

UNIDENTIFIED CROWD: (Chanting in Spanish).

KAHN: This protest was peaceful, but many turned violent with crowds overrunning police and looting stores, blocking major highways and gasoline stations. After 10 days of protests, more than 300 stores across the country had been ransacked, and authorities say more than a thousand people were detained.

BEATRIZ PEREZ: (Speaking Spanish).

KAHN: "We are sick and tired of this terrible government," says Beatriz Perez marching down Mexico City's main Reforma boulevard. She launches into a list of Mexico's current woes.

PEREZ: (Speaking Spanish).

KAHN: "Crime, corruption, the failing economy," she says. Add to that the plummeting peso, which seems to take a downturn after every Mexico-related tweet by President-elect Trump. Last week, he threatened to slap a border tax on auto companies exporting cars to the U.S. This week, he's reiterated his pledge to make Mexico pay for a border wall.

BILL ADAMS: It's harder to find silver linings for Mexico this year than it has been in the recent past.

KAHN: Bill Adams, senior international economist at PNC Financial Services Group, says the weak peso is driving up inflation and forcing a rise in interest rates.

ADAMS: And with higher gasoline prices, that is going to reduce consumer spending. The Mexican outlook is for a difficult year.

KAHN: Many economists are forecasting a recession for Mexico this year. At home, critics are placing blame on the president, whose popularity is the lowest of any modern Mexican leader. As Trump's tweets continued and the peso plunged, Pena Nieto shook up his cabinet, putting a longtime confidant in as foreign secretary.

Immediately after the appointment, the new head diplomat declared he had a lot to learn on the job. Professor and political commentator Denise Dresser says now is not the time to appoint someone with such a steep learning curve.

DENISE DRESSER: We see a Mexican government that is basically paralyzed and invisible, or when it comes out with statements, the statements are tardy or hesitant.

KAHN: Dresser says Mexico should be building international coalitions to stand up to Trump in a possible trade war with the U.S. For his part, Pena Nieto told a gathering of diplomats late this week that Mexico will not tolerate any more threats or scare tactics. He got a big applause, but it didn't do much to shore up the peso. Carrie Kahn, NPR News, Mexico City.

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