Mexico economy: things get uglier still

Financial Times, 6/11/2013

Those hoping that April industrial production data out on Tuesday would provide some measure of comfort on the direction of Mexico’s economy would be sorely disappointed. Industrial output in Latin America’s second largest economy fell 1.7 per cent compared to March in seasonally adjusted terms. The drop was the biggest monthly decline so far this year and the worst since December 2012 when it fell 2 per cent. Year-on-year, industrial production rose 3.3 per cent compared to April 2012, far below analysts’ expectations of a 5.3 per cent increase.

Behind the headline figures, manufacturing, which provides the bulk of Mexico’s non-oil exports, fell 1.2 per cent in April compared to March on a seasonally adjusted basis. It’s the first drop of the year and the biggest decline since 2012. The manufacturing number, combined with the 3.1 per cent monthly drop in construction activities, were so disappointing that analysts said they would immediately go back to their economic models to recalculate this year’s growth rate – just less than two months after they lowered their GDP forecasts for the year.

Read more…

Op-ed: Why Immigration Reform Would Boost Economy

By Steve Forbes, Forbes, 6/5/2013

Following the terrorist attack at the Boston Marathon, support for major immigration reform plummeted, even though the two perpetrators of the attack were here legally. That horrific event actually underscores the need for a big immigration overhaul. An estimated 11 million people are in this country illegally, and it would help our internal security to know who they are. The possibility of immigration legislation has also not been helped by the Administration’s ever worsening scandals involving the IRS, the media and Benghazi. Congress should push ahead regardless, not only for security reasons but to boost our economy.

Immigrants are a critical, underappreciated reason that the U.S. economy–the world’s largest–traditionally outperforms the other developed countries’ economies by a wide margin. Four out of ten of our largest companies, for example, were founded by immigrants or their children, including Intel, eBay and Google. Three out of four patents in 2011 from our top ten patent-producing universities, such as MIT, Stanford and Caltech, had an immigrant inventor. According to a study by Partnership for a New American Economy, immigrants are twice as likely as native-born Americans to be physicians and are also twice as likely to be home health aides. Given the looming crisis in doctor shortages in this country, we need that talent desperately. Our economy also needs low-skilled workers, particularly in agriculture.

Read more…

Mexico hopes China leader’s visit can narrow trade gap

AFP, 6/3/2013

The leaders of Mexico and China will meet for the second time in two months this week, a sign of deepening cooperation, even as the Latin American nation seeks to close a huge trade deficit. Chinese President Xi Jinping will be treated to a lavish two-day state visit in Mexico that begins on Tuesday, with an event at the Campo Marte military field with President Enrique Pena Nieto and a speech to Congress. Pena Nieto already met with Xi when he visited China in April, four months after taking office in a trip that observers say shows his desire to cast aside old trade rivalries in favour of a closer partnership.

“There is a new dynamic in the relationship between the two countries,” Mexican Deputy Foreign Minister Carlos de Icaza told AFP. The arrival of two new presidents – Xi took office in March – “opens an opportunity to strengthen political dialogue and find ways to ensure that the flow of trade and investments between both nations is more balanced,” he said. The two sides are expected to sign 10 agreements in fields such as trade, investments, infrastructure, science and education.

Read more…

Mexico peso peers over precipice to much steeper fall

Reuters, 6/3/2013

Mexico’s peso could slide even further if convictions mount that the massive monthly U.S. monetary stimulus is nearing an end and lead to an exodus of foreign investors who have piled into Mexican markets. The dizzying slide in the currency, down about 7 percent in the past three weeks, came as investors worried the Federal Reserve might taper off on bond purchases in response to a better U.S. economy and job market.

Although such a move by the Fed should support Mexico and its exporters in the long term since the local economy moves in sync with its northern neighbor, the mere thought of rising market rates in the United States spooked investors who had pushed the peso to its highest in nearly two years in early May. Assets in Mexico, with its close ties to the United States, have been among the most popular investments to leverage cheap loans in developed currencies and the prospect of a Fed exit spurred the worst sell-off in Mexican bonds since late 2010.

Read more…

Mexico’s economy: Reality bites

The Economist, 5/24/2013

Investors who were starry eyed about Mexico’s economic potential at the start of the year are now having misgivings. From a record high then, the stockmarket fell to an eight-month low on May 21st. Just to rub it in, stocks in Brazil, which Mexico views as its main regional rival, have recently been performing much better.

The immediate catalyst for the change of mood is the economy. In December, just as President Enrique Peña Nieto came to power promising to increase Mexico’s growth potential, the country’s strong recovery from the 2008-09 global financial crisis hit the skids. In the first quarter of 2013 sluggish sales to the United States, by far Mexico’s largest export market, helped reduce growth to a modest 0.8% compared with the same period in 2012. A fall in public spending as a new party took power contributed to the dip.

Read more…

Good reasons to visit Mexico’s less-traveled destinations

San Francisco Chronicle, 5/21/2013

To anyone who was wondering whether President Enrique Peña Nieto would be as staunch an advocate of Mexico’s tourism industry as his predecessor had been didn’t have to wait long for an answer. Presenting his national tourism policy in February, he said he intended to turn Mexico into a world-class destination, and his new Secretary of Tourism, Claudia Ruiz Massieu, said tourism will be the “engine to drive development for all Mexicans.”

Though the presentation was laced through with government-speak and obviously aimed less at tourists than at economic policy-makers concerned with an industry that generates nearly 9 percent of Mexico’s gross domestic product, tourists could already see some of the results by the time Mexico’s annual Tianguis Turistico, Latin America’s biggest tourism trade event, took place in March. Mexico Mix previously covered some of the announcements  affecting visitors to some of the country’s most popular destinations in March.

Read more…

#DidYouKnow – Immigrants & the Economy

Did you know undocumented immigrants pay taxes, too? Or that immigrant-owned small business employ almost 5 million people a year? Our friends at Americas Society/Council of the Americas compiled interesting facts about immigrants and their contributions to the U.S. economy.

Click here to view the full fact sheet.

San Diego Mayor Building Economic Bridges to Tijuana

The New York Times, 5/12/2013

Opening a satellite city office in a far-flung neighborhood is not unusual in sprawling cities like this one. But one thing sets apart Mayor Bob Filner’s newest outpost: it is in another country. When he opened San Diego’s Tijuana office this year, Mr. Filner spoke in grand terms about the future of cross-border relations. “Dos ciudades, pero una region — we are two cities, but one region,” he said, using the phrase popular among those who want more collaboration in the area. San Diego would put in a bid for the 2024 Summer Olympics, he said, but only to host jointly with Tijuana.

For years, this coastal city was widely viewed as a hotbed of illegal immigration. Neighbors traded stories of migrants hiding in their garages and hopping through their backyards. But now the region is considered one of the safest parts of the Mexican border, and the number of apprehensions of people crossing illegally is a tiny fraction of what it was a decade ago. The changes have helped bring an astounding shift in residents’ attitudes toward the border: far from seeing it as a threat, more are embracing it as a potential economic engine for the region. Perhaps one of the most remarkable things about Mr. Filner’s efforts to bolster Tijuana is that there has been no opposition from other politicians or organized protests from conservative critics.

Read more…

In Latin America, U.S. Focus Shifts From Drug War to Economy

The New York Times, 5/4/2013

In February 2009, Attorney General Eric H. Holder Jr. declared that international drug trafficking posed “a sustained, serious threat” to Americans. Two months later, President Obama, in his first visit as president to Mexico, made it clear that no issue dominated relations between the two countries more, saying drug cartels there were “sowing chaos in our communities.”

Last week, Mr. Obama returned to capitals in Latin America with a vastly different message. Relationships with countries racked by drug violence and organized crime should focus more on economic development and less on the endless battles against drug traffickers and organized crime capos that have left few clear victors. The countries, Mexico in particular, need to set their own course on security, with the United States playing more of a backing role.

Read more…

Obama Visits Mexico – Weekly News Summary: May 3rd

The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.

What the English-language press had to say…

This week, President Obama met with Mexico’s Enrique Peña Nieto. During his visit Obama sought to recast the U.S.-Mexico bilateral relationship in terms of economic and not just security, cooperation. He called for an end to “old stereotypes” and a need “to recognize new realities.” In an op-ed for Fox News Latino, former U.S. Ambassador to Mexico Antonio Garza argued the time is ripe to advance bilateral relations in terms of security, migration and trade.

Years of “unprecedented closeness” and security cooperation between U.S. and Mexican intelligence agencies were said to be in jeopardy. The New York Times, Los Angeles Times, TIME Magazine and The Washington Post all commented on the current Mexican government’s decision to curb American involvement in the war against violent drug cartels.

Two recently conducted surveys – one prepared by the Chicago Council on Global Affairs and the Woodrow Wilson Center; the other by the Pew Research Center – presented interesting results regarding American attitudes towards Mexico and Mexican views towards Americans.

The Peña Nieto administration’s reformist agenda enjoyed yet another victory when a bill to reform Mexico’s tightly controlled telecommunications sector won final approval in the Mexican Congress. Despite this, however, Reuters reported on the growing tensions within the Pacto por México, and said further cooperation between the three main political parties would likely be put on hold until a vote-buying scandal is resolved. Meanwhile, The Christian Science Monitor reported on the joint bid by San Diego and Tijuana to hold the first U.S.-Mexico cross-border Olympic games in 2024.