The uncertainty created by NAFTA negotiations is expected to stretch into 2019, a report from Scotiabank Global Economics says.
As it stands, the “ongoing efforts to ‘renegotiate and modernize’ NAFTA look set to extend beyond the current [March] 2018 deadline,” mainly due to “difficult issues” that will remain unsettled, the Feb. 2 insights report says.
“The remainder of 2018 features a packed political calendar that could delay further talks,” it says, and the bank predicts a new version of the pact won’t be finalized until 2019, with a 75% probability of that occurring.
The extension of NAFTA talks is better than the agreement being axed, the report adds, but it means a “prolonged period of uncertainty about the future of NAFTA [that could] reduce Canadian and Mexican annual real output growth by about 0.2 percentage points during 2018.” Meanwhile, U.S. growth shouldn’t be dampened as much, it says.
Read the full report, for more on what could happen if the U.S. withdraws from the agreement.