particular, while a lot of attention is paid to the increased probability of a recession in the united states, the baseline scenario for growth above potential this year and not far from this level for 2020 is usually not attached the same importance. clearly, the disruptive impact of a surprise along these lines could be far greater under current expectations. a second aspect of today ’ s global economic landscape that is worth highlighting relates to the turn towards protectionism of recent. the costs, both in the short and the long terms, impinged on the world economy from increased tariffs and other barriers to trade have been extensively discussed, and the impact is already evident in international trade figures. in fact, the wto recently reduced projections for global trade growth for 2019 to the lowest level in three years, to a significant extent as a result of rising commercial tensions and tariffs. 5 the implications for trade in intermediate goods within the framework of global value chains ( gvcs ) is particularly worrisome for a number of reasons : world trade organization ( 2019 ) : “ global trade growth loses momentum as trade tensions persist ”, trade statistics and outlook, press release no. 837, 2 april. the proliferation of gvcs lost momentum since 2011, and this trend has probably been accentuated by the aforementioned protectionist actions. however, their importance at present remains significant : around 70 percent of international trade is for production under these arrangements, a figure that can be roughly translated as trade in intermediate goods and services being about twice as large as that serving final demand. 6 notwithstanding their prominence, gvcs are particularly at risk due to ongoing trade conflicts. this is mainly due to the cumulative effect that tariff increases have on the total production cost of final goods, given their multiple border crossings within these frameworks, a principle that applies to other trade barriers as well. 7 additionally, a deeper sense of caution may hinder further country integration ( both at the intensive and extensive margins ) into gvcs, in view of the magnification of spillovers from bilateral tariff increases that they bring about. 8 thus, it would be reasonable to expect a further, albeit probably protracted, retrenchment in gvcs as regional and global production arrangements adjust to environments characterized by higher barriers to international trade. gvcs are an important driver of productivity gains in the partaking economies through a number of channels. in addition to the innovation, carstens, a. ( 2018 ) : “ global market structures and the high

remarks by mr. javier guzman calafell, deputy governor at the banco de mexico, at the panel of central bank governors on “ new challenges for central banks in latin america ”. seminar on financial volatility and foreign exchange intervention organized by the central reserve bank of peru and the interamerican development bank. cusco, peru, july 25, 2017. 1 the central banks from emerging market economies ( emes ) have faced a challenging external environment in recent years. the monetary policies implemented by the advanced economies after the global financial crisis, combined with episodes of turbulence in highly integrated international financial markets deriving from a combination of factors, have resulted in substantial volatility of capital flows. in addition, emes have confronted a world economic environment characterized by lower rates of global potential growth, a decline in commodity prices, a growing anti - globalization sentiment and events of a geopolitical nature. the combination of these factors has led to a situation of acute uncertainty. if this were not enough, the global financial crisis has eroded confidence on our understanding of the economics science and of the proper way to implement monetary policy under current circumstances. the mexican experience of the last couple of years provides an illustrative example of the nature and magnitude of the challenges that our central banks have faced. since mid - 2014, the country has been hit by a combination of external shocks. to a significant extent, the current evolution of the economy the opinions and views expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. has been determined by the impact of these shocks and the economic policy that has been implemented in response to them. let me refer briefly to the most important : 1. the price of the mexican crude oil basket fell from around 100 dollars per barrel in june 2014 to some 45 dollars per barrel at present. although the share of oil in exports and gdp is relatively modest, it accounts for a substantial share of public revenues. therefore, these developments have had significant implications for public finances. in fact, when the impact of the concurrent reduction in oil prices and output is taken into consideration, the result is a decline in annual public revenues from this source of approximately 5 percent of gdp since 2012. 2. after a prolonged period with near - zero interest rates, the us federal reserve began to increase the target for the federal funds rate in late 2015. while this shock affects emes in general,