December 13, 2013
Financial Times, 12/12/13
After being banished to an auditorium when leftist deputies hijacked the chamber, Mexico’s lower house of Congress passed historic energy reforms on Thursday designed to lure billions of dollars in investment to a sector shackled to the state for 75 years.
Cheers of “Mexico, Mexico” were met by chants of “traitors, traitors” from critics of the reform at the culmination of a rowdy session, which was switched to a crowded auditorium after opponents padlocked the chamber and blocked it with chairs in a bid to derail voting.
July 9, 2013
Financial Times, 6/27/2013
A few years ago, as Mexico reeled from one of the worst recessions in living memory, the future looked grim – if not just plain menacing. By regional standards, at least, the 2 per cent average annual growth rate in the years preceding the downturn appeared anaemic. Political stalemate in Congress had all but erased any hope of passing economic structural reforms. A violent war on organised crime had some voices in Washington suggesting that Mexico could even be heading down the path towards becoming a failed state.
Fast-forward to today and Mexico is one of the brightest prospects in Latin America. No longer in the shadow of Brazil, where growth has slowed dramatically, the region’s second-largest country suddenly appears strong and confident. The economy is likely to expand at more than 3 per cent this year after growing 3.9 per cent in 2012. International investors have rekindled their love for Mexico. Between the start of this year and May 8, the country received a net US$5.6bn in fixed-income and equity flows, three times the amount that went to Brazil. Before June’s generalised emerging markets sell-off, this new-found favour helped push Mexican sovereign borrowing costs to record lows, and the stock market to record highs.
June 19, 2013
In the past decade, Mexico’s tech industry has flourished, growing three times faster than the global average. Most of that growth has been fueled by demand from the United States. But as Mexico’s startups strive to make it in foreign markets, they say they need more engineers and ways to finance their growth.
Softek, Mexico’s biggest technology services company, spans four continents and provides software support to a client base that includes Fortune 500 companies. The business sector is growing rapidly in Mexico, thanks in large part to the country’s proximity to the United States. “I think it’s safe to say that without the U.S., the Mexico market would not be doing very well,” says Morgan Yeates, an analyst with the IT consulting firm Gartner.
June 18, 2013
Mexico’s economic growth will quicken as the government increases spending in the second half of the year, Finance Minister Luis Videgaray said. The economy grew at the slowest pace in more than three years in the first quarter after spending was contained after a new government took over in December, Videgaray said in an interview in London. President Enrique Pena Nieto took office on Dec. 1.
Investor confidence in Mexico has waned after the economy expanded less than analysts expected in the first quarter and government plans to overhaul the state-controlled oil industry were held up. Capital flows also have slowed on signs the U.S. Federal Reserve could scale back asset purchases as economic growth strengthens. “We expect much more accelerated spending in the second semester,” Videgaray said. “The budget is there and the revenue is there.” Mexico’s government spending fell about 7 percent in real terms to 1.16 trillion pesos, or $90 billion, in the first four months of 2013 compared to the year-earlier period, according to data from the central bank.
June 17, 2013
Federal Reserve Bank of Dallas, Second Quarter 2013
Mexico’s sharp first-quarter slowdown isn’t entirely surprising. While the country has made considerable economic advances in recent years, its growth is closely tied to that of its northern neighbor, and the U.S. economy stalled at year-end. Some Mexico indicators, such as industrial production, have been flat since mid-2012. The lackluster performance, although a cause for concern, gives impetus to the efforts of Mexico’s new president, Enrique Peña Nieto, who in his first months has worked with the nation’s major political parties to achieve labor, education and telecommunications reforms. Judicial, banking and energy industry changes are in the works.
The Pact for Mexico represents the latest attempt over a three-decade span to achieve reforms and propel the nation forward. The challenges Mexico confronts as it seeks to become a leader among emerging economies were considered at a Federal Reserve Bank of Dallas conference, “México: How to Tap Progress,” last fall in Houston. The meeting explored why economic expansion in Mexico has barely kept up with population growth and why the nation’s per capita income growth has trailed that of emerging-market economies such as Brazil and Chile.
June 13, 2013
When President Obama visited Mexico in May, he spoke a few words of Spanish, praised the paintings of Frida Kahlo and quoted author Octavio Paz. Then he hit his key message: “Because of the sacrifices of generations, a majority of Mexicans now call themselves middle class, with a quality of life that your parents and grandparents could only dream of.” The words conjured up an image of a Mexico transformed from the campesinos of the early twentieth century to a rising power for the new millennium. Mexico’s “new middle class” is also a big theme for its new president, Enrique Pena Nieto, who wants his neighbors to think of Mexico as more than just a place of beautiful beaches and violent crime. Obama’s speech dovetailed neatly with Pena Nieto’s agenda, but it has sparked a national debate here, about what makes someone middle class in Mexico, and whether the middle class are really thriving or just surviving. After a disappointing first-quarter— Mexico’s economy grew just .8%, the worst performance since the end of 2009, that debate has renewed urgency.
Among the residents of the Mexican capital, from its cinderblock slums to its Bohemian bookshop-cafes to its plush financial district, there is little consensus. Brenda Venega, a student, defines middle class as someone earning more than 8,000 pesos ($640) per month; she falls into that box thanks to her parents. Marisol Granados, a waitress in a cafe, insisted there was no middle class, only have and have nots, and that she was part of the latter. Computer repair shop owner Victor Serna says the middle class have privileges that set them apart from the rest, and he was in of the poor majority. “The middle class is smaller all the time and the gap is growing,” says Jose Lopez, a health administration worker. “Jobs are paid less while prices go up.”
June 6, 2013
The Huffington Post, 6/6/2013
With all the hype Mexico’s “booming” economy has been garnering over the past, it may have come like a dousing of iced water to see GDP growth screech to a halt during the first quarter of the year, the first full quarter under the administration of Enrique Peña Nieto. At first glance, the figures looked grim: year on year growth was a meagre 0.8%, the weakest since the 2009 recession, and far below the 3-5% rates Mexico watchers had been accustomed to over the past three years. Fortunately, behind this number was a statistical anomaly in that the Easter break fell in March rather than April, thereby knocking off a few days of activity when making the year on year comparison. However, a calendar adjustment showed that growth was still sluggish at 2.2%, a number which looked more fitting for the gloomy past decade than in the roaring era of the “Aztec tiger.”
Since then, there’s been a slight reversal in the tone about Mexico. After a smooth ride since 2010, it has now dawned on many of the formerly excited observers that there are some bumps on the road to prosperity. For all these recent jitters, it certainly doesn’t appear like the fiesta is over. There are still questions, however, over just how bombastic it will turn out.
May 30, 2013
By Edgardo Buscaglia, The New York Times, 5/30/2013
It is fashionable in the United States these days to assert that Mexico has arrived on the world stage economically and politically. Certainly, Mexico’s political, business and union elites have acquired great wealth — explained and unexplained — since the signing of the North American Free Trade Association with the United States and Canada in the 1990s.
Yet the vast majority of Mexicans face a daily struggle to survive under a government that is often either absent or corrupt, high levels of common and organized crime, a chronic lack of formal employment opportunities, and the highest levels of insecurity since the Mexican Revolution. Though it is now caught in a painful political transition, Mexico has the potential to become a world-class economic and political powerhouse. But it’s not there yet. Several necessary ingredients are missing.
May 29, 2013
The majority of foreign and domestic companies in Mexico say security has either improved or remained unchanged from last year, and almost half expect more improvement within five years, according to a survey released on Tuesday. In the survey conducted by the American Chamber of Commerce of Mexico, 42 percent of the 531 respondents said the security situation had improved. “We attribute this mainly to the actions of the federal authorities and the measures undertaken by the companies themselves,” said Thomas Gillen, president of the chamber’s security committee, who presented the findings.
Forty-two percent of respondents said the security situation had not changed and 13 percent said security had deteriorated. More than half of the latter group cited corruption as the cause of the deterioration. Foreign investment in Mexico rose to a six-year high in the first quarter of this year, Mexico’s Economy Ministry said earlier this month, with foreigners pouring $4.99 billion into Latin America’s No. 2 economy as they tried to gain a foothold in its booming manufacturing sector.