Mexico banks on stronger economic growth later this year

Financial Times, 5/16/2013

Over the past few years, officials at Mexico’s national statistics agency have become used to publishing the glowing quarterly economic growth figures that have plotted the country’s recovery since the financial crisis. But on Friday, the statisticians will probably show the world a very different set of numbers – one that, if economists have their estimates right, will confirm the worst year-on-year quarterly result since the 2009 recession. Some even suggest that it might be negative.

Could it be that Mexico’s rebound, which has helped Latin America’s second-largest economy emerge from Brazil’s shadow into full view of international investors, is coming to an end?

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Mexico: time to boost domestic demand

Financial Times, 4/22/13

If there were ever any proof of the need for structural economic reform in Mexico, you could do worse than to look at February’s retail sales, which came in far below expectations.

On Monday, the government’s statistics agency reported that sales were down 0.1 per cent in February compared with the previous month in seasonally adjusted terms, and a chilling 2.6 per cent down on figures for the same month last year. HSBC had predicted a 1 per cent increase, and Banamex, Citi’s Mexico arm, had expected a 0.5 per cent increase). All in all, that is the worst year-on-year fall in more than three years. So what’s going on?

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Expanded immigration would reduce the federal deficit, some conservatives say

The Washington Post, 4/8/13

Conservative champions of opening the flow of legal immigration into the United States are invoking economics in hopes of winning Republican lawmakers’ support — specifically, the idea that more immigration will increase growth and cut the federal budget deficit.

The American Action Forum, a conservative think tank, will release an analysis on Tuesday that projects that an overhaul of immigration laws could boost gross domestic product growth by a percentage point each year over the next decade. That growth would produce tax revenue that would reduce federal deficits by a combined $2.5 trillion, according to the group’s president, the economist Douglas Holtz-Eakin.

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Mexico-Brazil: Competing Economic Models?

AULA Blog, 4/8/13

The divergent economic performances of Mexico and Brazil over the past few years have again thrust upon analysts the difficult task of estimating which factors – public policies, market trends, geographic location, financial market managers’ perceptions, or something else – are responsible for the different results.  Brazil was everyone’s favorite two years ago, but Mexico is now being hailed as the hot performer – and praise is being heaped on Mexico City for making things happen.

Former Chilean Finance Minister Andrés Velasco, writing for Project Syndicate, explores why the Brazilian economy today is “stagnating” while Mexico, written off as a “lost cause” just two years ago, is “expanding at a steady clip.”

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Op-ed: Mexico’s New Boom: Why the World Should Tone Down the Hype

By Tim Padgett, TIME, 3/8/2013

I couldn’t be happier that Mexico’s economy is rebounding. After barely 2% average annual growth between 2000 and 2010, the country’s GDP expanded almost 4% in 2011 and 2012. Investment is booming and the middle class is enlarging. Mexico’s manufacturing exports lead Latin America, and its trade as a share of GDP tops China’s. Its No. 53 spot on the World Bank’s ease-of-doing-business rankings far outshines the No. 126 grade of its main regional rival, Brazil; it has signed more free trade agreements (44) than any other country, and it’s enrolling more engineering students than any south of the Rio Grande.

But I emphasize: it’s a trend. It’s not the miracle, the economic version of the appearance of Our Lady of Guadalupe, that so many Mexico cheerleaders from government officials to foreign investors to embassy diplomats are insisting we call it. Yes, good news from Mexico is more than welcome after a decade overshadowed by horrific narco-violence; a more positive conversation about the country is a relief. But no matter how loudly the enthusiasts scold the media for dwelling on Mexico’s mayhem, the cartel killing hasn’t stopped, and many of the socio-economic ills that help breed the brutality persist. The media didn’t just make up the 60,000 gangland murders of the past seven years, or the relentless massacres and beheadings, or reports like the one released last week by Human Rights Watch about the 27,000 Mexicans who have disappeared during the drug war.

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Op-ed: Everybody is upbeat on Mexico — except Mexicans

By Andres Oppenheimer, The Miami Herald, 3/2/2013

During a visit here last week, I couldn’t help being surprised by the scornful reaction of many Mexicans to the growing consensus in the world media that this is “Mexico’s moment” in the global economy. Over the past few weeks, there has been a flurry of glowing headlines around the world announcing that Mexico will eclipse Brazil, and perhaps even India and China, as the world’s most promising economic star.

Last week, Foreign Affairs magazine ran a story titled Mexico makes it, and New York Times’ columnist Thomas Friedman wrote a column titled How Mexico got back in the game. In January, The New York Times ran an opinion piece by former Wired magazine editor Chris Anderson titled Mexico: the new China. A few days later, The Financial Times published a story under the headline Mexico: Aztec Tiger.

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Growing at 4% a year – faster than U.S. – Mexico can provide boost to U.S. economy – #MexFacts

Read the full policy brief here…

Mexico: Aztec tiger

Financial Times, 1/30/2013

High street stores do not come much more Mexican than Sanborns. With its rather disjointed collection of chocolates, jewelry and magazines and its cafeterias staffed by waitresses in folkloric skirts, the retail chain has long been a symbol of homespun tradition. But even with its chaotic charm and staid looks, Sanborns, owned by Carlos Slim, the world’s richest man, is now also becoming a symbol of Mexico’s new-found economic dynamism.

This month, Mr Slim confirmed that he would list Sanborns on the stock market to raise about $800m. The idea, he said, was to take advantage of high stock valuations and use the money to cater to the increasing prosperity of the country’s middle classes. Sanborns’ plans to list come as the country is becoming the latest darling of international investors, emerging from the shadow of Brazil, whose economy has lost its lustre. Mexico’s economy expanded almost 4 per cent last year, about double the average annual growth rate this century.

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Mexico Is Catching Up to Brazil [opinion]

The Weekly Standard, 9/17/12

After growing by 7.5 percent in 2010, Brazil ran into a series of headwinds last year, including a slowdown in China (its largest trading partner), a sharp rise in its national currency (which depressed exports), and a worsening of the European debt crisis. The country grew by 2.7 percent in 2011 and by a measly 0.1 percent in the first quarter of 2012. On August 31, the Brazilian government announced that second-quarter growth was only 0.4 percent, prompting Reuters to note that “Brazil may struggle to reach the market’s average expectations for 1.7 percent GDP growth for 2012.”

Mexico, meanwhile, grew by 3.9 percent last year, and analysts expect it to grow by around 3.75 percent this year, according to the latest monthly survey by the Mexican central bank. (Barclays is more bullish, predicting that the country’s 2012 growth rate will reach 4 percent.) Mexico’s car industry has been thriving, and its rapidly expanding middle class now represents a majority of the national population.

Not only is Mexico outpacing Brazil in short-term growth, its long-term economic trajectory is looking better, as well. Last month, economists at the Japanese bank Nomura projected that Mexico would grow at an average rate of 4.25 percent to 4.75 percent during the next ten years, while Brazilian growth would average 2.75 percent to 3.25 percent. If the Nomura forecast proved accurate, and if the coming decade brought high growth in Mexico and low growth in Brazil, then Mexico (current population: 114 million) would have a bigger economy than Brazil (194 million) by 2022.

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Banamex: Mexico will receive high levels of investment in 2011 (in Spanish)

El Seminario, 1/10/2011

Considerando las altas tasas de interés locales, la fortaleza del peso, las mejores perspectivas que se tienen sobre la economía mundial y los sólidos fundamentales macroeconómicos que presenta México, analistas de Banamex anticipan que nuestro país será un importante receptor de inversión extranjera en este 2011, lo que tendrá un impacto favorable en el tipo de cambio y en los mercados locales de bonos y capitales.

En un reporte publicado hoy por dicho banco, México inicia el 2011 en condiciones económicas favorables, donde pese a que el crecimiento económico es moderado, las finanzas públicas avalan la solvencia de su deuda soberana, el desequilibrio de las cuentas externas es fácilmente financiable, mientras que las reservas internacionales alcanzan niveles récord y nuevamente se tienen mecanismos de cobertura para enfrentar la volatilidad en el precio del petróleo.

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