Latin America’s second-largest economy—Mexico— wants to reduce economic dependence on the United States, says President Felipe Calderon, who warns of “very weak growth” from its northern neighbor.
And whether the Federal Reserve decides to embark on another round of stimulus this week at its policy-setting meetings will have little bearing on how the U.S. economy performs, Calderon told CNBC on Tuesday.
“We are expecting very low growth and recovery in the American society and economy,” Calderon told CNBC during a visit to Singapore. “We need to be prepared, and that is why Mexico is looking for new markets and we're trying to reduce our dependency on the United States.”
Mexico, which is the United States’ third-largest trading partner in goods, shipped nearly 80 percent of its total exports to its northern neighbor in 2011. The economy shrank 6.5 percent in 2009 when it was hit by the global financial crisis that started with the collapse of Lehman Brothers in the U.S.
“The Mexican economy is linked with (the) American economy,” Calderon said. “However, our strategy is to diversify our relationship. In that sense, we're looking to do business with Europe, we're looking to do business and trade with Asia…I know that we are able to connect directly our economy with powerful economies here in Asia.”
Besides looking to boost trade with Europe and Asia, Mexico is also undertaking reforms by reducing tariffs and red tape, investing in infrastructure and promoting private investment in the country, Calderon said.
What has stood in the way of more private investment in the country is organized crime, which Calderon acknowledged is a key deterrent to foreign direct investment. His government is addressing the issue by strengthening law-enforcement agencies, he said.
“Yes, it has an impact, of course,” he said. “That is the reason why my government is investing a lot in terms of enforcement agencies in order to change public institutions, in order to fight organized crime with the full force of federal authorities, in support of local authorities in that sense.”
Mexico received $4.37 billion in foreign direct investment in the first quarter, down 8.7 percent from the same period in 2011, with the U.S. accounting for 37.3 percent of the inflow, followed by Spain at 28.7 percent, and Luxembourg at 9.1 percent.
—By CNBC’s Jean Chua.