Venture Capital Is Taking Off in Mexico

CNBC, 9/18/2012

Mexico has a large, stable and growing economy, currently the 14th largest economy in the world and, according to Goldman Sachs, [GS  119.79    -0.11  (-0.09%)   ] will be the fifth largest economy by 2050.

Mexico has such a solid  context that — among the only four countries to have recovered all the lost ground after the stock markets crashed during the 2008 financial crisis — Mexico is the fastest-growing country according to the MSCI index, surpassing the U.S., Singapore and Sweden.

Read more…

Calderon Faces Uphill Battle on New Taxes

Reuters, 9/09/09

MEXICO CITY, Sept 9 (Reuters) – Mexican opposition lawmakers said they were leery of President Felipe Calderon’s fiscal reform proposal, suggesting an uphill battle lies ahead for the leader’s push to raise taxes during a steep recession.

Poverty is rising in Mexico, where the economy is in its deepest economic downturn since the Great Depression of the 1930s, making it a difficult time to hike taxes.

Read More…

Mexico’s Peso Advances, Snapping Longest Slump Since October

Valerie Rota, Bloomberg, 7/15/2009

Mexico’s peso rose, halting its longest slump since October, after a report showed U.S. industrial production fell in June at the slowest pace in eight months, buoying speculation the worst of the recession is over.

The peso advanced for the first time in eight days, rising 0.5 percent to 13.6837 per U.S. dollar at 11:06 a.m. New York time, from 13.7482 yesterday. The Mexican peso joined a rally among all of the six most-traded Latin American currencies.

Read More…

Mexico remittances plunge in worst drop on record

Associated Press, 7/1/2009

Money sent home by Mexicans working abroad fell by 19.9 percent in May, the biggest monthly decline on record as the U.S. recession slashed jobs.

Remittances dropped to $1.9 billion from $2.4 billion in May 2008, the central bank said on Wednesday. The amount of money sent home in the first five months of 2009 fell 11.3 percent to $9.2 billion compared with the same period last year.

Remittances are the second-biggest source of foreign currency after oil exports in Mexico, and their decline has contributed to the country’s own economic downturn.

Read more…

The Mexican Economy: Following Closely in Its Neighbor’s Footsteps

Knowledge @ Wharton, 6/3/2009

The pessimistic economic forecasts about Mexico have proven to be right. Day by day, the Latin American nation is becoming increasingly affected by the economic crisis. Its GDP for the first quarter of 2009 fell 8.2% from last year, according to INEGI, the National Institute of Statistics and Geography. Agustin Carstens, Mexico’s finance minister, recently declared that the government has adjusted its expectations for 2009. It now expects the GDP to contract by 5.5%, compared with the government’s previous estimate of 4%.

Juan Carlos Martínez Lázaro (a professor at the IE Business School), notes that the [swine] flu is especially damaging to the service sector, but “it is probably suffering less than the export-oriented industries in the economic crisis.” He says the service sector was the Mexican government’s “ace up the sleeve” for dealing with the recession. “The government had put its hopes in the idea that internal demand would make up for the collapse of the external sector, but the flu had a terrible impact … The service sector represents almost 65% of the Mexican GDP.”

Read more…

Mexico Better Equipped For Crisis Than In 1995 Recession

Wall Street Journal, 6/3/2009

As Mexico ploughs through its deepest recession since the crisis of 1995, revamped public finances and well-capitalized local banks put it on a much stronger footing than it had 14 years ago.

Mexico faces a perfect storm of a recession in the U.S., which buys 80% of its exports, a decline in global trade due to weakness in the major economies of Europe and Asia, and a domestic influenza epidemic in late April and early May that hurt service industries such as tourism and restaurants.

Today’s woes are largely the product of the international financial crisis and resulting global downturn, while the so-called Tequila Crisis was a home-grown disaster fueled by an overvalued currency, large public-sector deficits and government dependence on financing linked to the U.S. dollar.

Read more…

In February 2009, Guillermo Ortiz, Governor of Mexico’s central bank, wrote a commentary comparing Mexico’s relative levels of preparation for the Tequila crisis and the current global financial crisis.

See also an analysis by Bloomberg on how the swine flu outbreak has contributed to Mexico’s deteriorating economic climate.

Op-Ed: The Financial Storm Hits Mexico

Op-Ed, Wall Street Journal, 3/9/2009

The crisis is captured in the plummeting peso, which has fallen more than 30% against the dollar in the past six months. Yet the feeble peso is only the most visible symptom of what ails the country. The real problem is that in the current global recession, Mexico as a destination for capital has lost most of the limited appeal it once had. And while public dismay offers an opportunity to reform longstanding inhibitions about foreign investment, the political class appears apathetic toward that possibility.

These are some of the reasons Mexico may be considered an innocent victim of circumstances. But there are also homegrown rigidities in the economy that are exacerbating the problem. Monopoly privileges in key sectors like energy and telecom have made Mexico a far less competitive producer than other emerging markets. Moreover, the tax code is burdensome and labor laws are inflexible. The drag applied by this pernicious tax and regulatory environment helps explain, in part, the 32% drop in foreign direct investment from 2007.

Read more…

Investment in mortgage market falls 17.7% (in Spanish)

El Universal, 3/5/2009

Investment in mortgage financing in the Federal District totalled 24.2 billion pesos in 2008, an amount that was 17.7% less than the previous years, and the number of loans was 74,545, 5.5% less than in 2007.

According to the firm Softec, in 2008 there were less real estate projects in the Federal District, due to restricted financing for construction among financial institutions and developers as a result of the crisis, which reduced liquidity in the markets.

In addition, the Mexican Association of Real Estate Professionals (AMPI) highlighted that the crisis generated uncertainty among people wanting to purchase a home, which has also provoked a contraction in home sales.

Read more…

Microfinancing still resilient in Mexico

Financial Times, 2/26/2009

Until a year ago, microfinance and low-income banking in Mexico were a joint success story, growing at rates that made the rest of the country’s banking sector look sluggish. But since the beginning of last year, as credit began to dry up on fears of global recession, the fortunes of the two sectors have diverged markedly.

Hardest hit has been low-income banking, where past-due loans have risen alarmingly. In the case of Bancoppel, for example, a bank built up around a well-established Mexican retail chain, past-due loans rose from 4.39 per cent of total loans in December 2007 to 20.12 per cent in December last year.

Mexico’s microfinance sector is a different story. At Compartamos, which started life as a non-governmental organisation and has grown to become Latin America’s largest microfinance organisation by number of customers, past-due loans have increased only marginally, from 1.37 per cent to 1.71 over the past year – considerably better than Mexico’s traditional banking sector, which saw an increase from 2.38 per cent to 3.21 per cent.

Read more…

Mexico: 2008 foreign investment down sharply

Business Week, 2/20/2009

Mexico says foreign direct investment in the country dropped sharply to $18.6 billion in 2008, from $27.2 billion in 2007.

The decline is more pronounced because the Economy Department revised the 2007 figure upward, from the previously reported total of $23.2 billion.

Read more…