June 11, 2014
06/10/14 Deutsche Welle
Mexico’s economy is stuck in a rut that it won’t be able to climb out of easily. Growth forecasts have again been revised downwards – but the government says the economy will boom once reforms are implemented.
Mexican Finance Secretary Luis Videgaray Caso looked a bit tense during his appearance before the executives at BBVA Bancomer, one of the country’s main banks. He had intended to radiate optimism. But Mexico’s economy simply doesn’t seem to be able to get back on track, and all the world wants to know: What’s going on?
Last week, the government of President Enrique Peña Nieto revised its growth forecasts downward, from 3.9 to 2.7 percent. Earlier, the central bank had released figures that predicted lower economic growth than had been expected.
Although the Mexican economy actually grew last year – even if by just 1.1 percent – the numbers for the current year are disappointing compared to those of other Latin American countries such as Peru and Colombia.
May 22, 2014
The Economist, 05/24/14
So far this year Mexico’s government has resembled one of the country’s many devotees of St Jude, patron saint of lost causes. It has doggedly stuck to a 3.9% 2014 growth forecast, even though its main export market, the United States, has been sluggish, and the twin pillars of its domestic economy—buying and building—have fared even worse.
On May 21st the central bank revised its growth prediction down to 2.3-3.3%, from 3-4% previously. The government was expected finally to follow suit on May 23rd, when first-quarter GDP figures were due to be released. Even so, officials are convinced that within months the benefits of its plans to modernise the economy will start to show up in the numbers.
May 7, 2014
The Wall Street Journal, 5/6/14
Mexico’s sluggish economy should start showing signs of life in the coming months, but investors waiting for dramatic growth from a series of government overhauls may have to wait a few more years, Mexican Finance Minister Luis Videgaray said Tuesday.
In an interview with The Wall Street Journal, the man seen as the brains behind many of the government’s initiatives asked investors and ordinary Mexicans for a little more patience after Mexico’s economy grew a paltry 1.1% last year. That was despite a wave of investor enthusiasm generated by a series of initiatives that included opening the country’s closed oil-and-gas market to private companies.
“We have to be realistic in that these reforms are not going to bring immediate changes. We won’t see the results in the next quarter,” Mr. Videgaray said. “The reforms are designed to have an effect over the coming years and decades.”
In the short term, Mr. Videgaray said the economy had been a disappointment, but should start growing faster as the U.S. economy shakes off a winter chill and government spending south of the border starts to lift demand. He said Mexico’s construction industry, hard hit last year by new regulations, was showing signs of a nascent rebound.
“We expect a second quarter that is stronger than the first quarter, and a second half better than the first half,” he said.
In the past weeks, many economists have cut their forecasts on Mexican economic growth this year to around 3% from 3.4% at the start of the year. For its part, the Finance Ministry says it will have to wait to see first-quarter numbers, due later this month, before adjusting its forecast of 3.9%.
April 9, 2014
Bloomberg News, 4/9/14
Mexico’s annual inflation slowed to within the central bank’s target range in March for the first time this year.
The inflation rate fell to 3.76 percent, below the 4 percent upper limit of the target range, from 4.23 percent in February, the national statistics agency said. Prices climbed 0.27 percent from a month earlier, less than the 0.30 percent median forecast of 23 analysts surveyed by Bloomberg. Core prices, which exclude energy and farm costs, rose 0.21 percent.
Inflation has eased after reaching an eight-month high in January, when new taxes on junk food and soft drinks took effect. Central bank Governor Agustin Carstens said in an April 4 interview with El Financiero Bloomberg TV that he doesn’t see demand-side pressures on prices even as the economy rebounds following less-than-expected growth in the first quarter.
February 11, 2014
The Christian Science Monitor, 2/7/14
The views of Mexico’s economy by ordinary citizens and those living outside the country these days could hardly be more different. Mexicans are now feeling the impact of a tax overhaul enacted late last year, and it has put them in a grumpy mood. Consumer confidence, as measured by a government index, has fallen to its lowest level in four years.
In January alone, the confidence index fell 6.2 percent and is down 15.5 percent from a year earlier. Everyone feels the pinch of the new taxes – from the consumer buying a soft drink at the corner kiosk to the millions of Mexicans living near the US border who suddenly saw a 5 percent increase in the value-added tax. Economists say the sour mood will have a short-term impact on sales of appliances and other durable goods as Mexicans, feeling poorer, rein in their purchases.
But over at Los Pinos and at the Finance Secretariat, government officials are giving each other high fives over a decision by Moody’s to upgrade Mexico to a coveted “A” grade sovereign rating, making Mexico only the second country in Latin America after Chile to earn such a rating.
December 3, 2013
Mexico should ramp up public spending in the first months of 2014 and its economy is also likely to receive help from improving conditions in the United States, central bank governor Agustin Carstens was quoted as saying on Tuesday.
Mexico’s economy is performing at its weakest since 2009, with analysts polled by the central bank expecting it to post growth of around 1.3 percent this year.
In an interview with newspaper El Universal, Carstens reiterated the bank’s view that economic expansion was likely to pick up to around 3 percent to 4 percent next year, as the United States’ recovery gathers strength, lifting Mexico’s exports.
November 27, 2013
Mexico’s recent tax overhaul does not do enough to curb the government’s dependence on oil revenue while other major reforms may not boost economic growth as much as authorities forecast, the International Monetary Fund said on Tuesday.
“With the prospect of declining oil production over the next decade, the federal government needs to beef up its collection on non-oil revenues,” the IMF said in a report on the fiscal reform that accompanied its so-called Article IV consultation with Mexican authorities.
October 31, 2013
The Financial Times, 10/31/2013
After an education overhaul that prompted mass street protests and tax changes that sparked a Senate walkout by the main opposition party, Mexico is gearing up for the main event of the 11-month administration’s ambitious agenda: energy reform.
President Enrique Peña Nieto’s plans will allow foreign investment into the sector – a major change of direction for a country that kicked out oil multinationals in 1938 and has clung to a fierce national pride in its oil ever since, despite falling production and the need to import petrol from the US to sell in its state-run gas stations.
October 16, 2013
The Wall Street Journal, 10/15/2013
Emerging-market investors’ love affair with Mexico is showing signs of strain as sluggish growth is weighing on the outlook for the country’s stock market.
Mexican shares rallied to record highs in January, as optimism about policies promoted by the newly elected president, Enrique Peña Nieto, bolstered the country’s allure as emerging markets were heating up.
October 16, 2013
The Economist, 10/14/2013
In the hallowed name of the middle class, Mexico’s politicians have been doing a lot of huffing and puffing lately. The source of their indignation is the president’s plan to raise income tax on annual salaries over 500,000 pesos ($38,000) and impose value-added tax on private schooling and mortgage payments. That, the people’s representatives complain, would beat the stuffing out of ordinary, hard-working families, so they plan to spare them the tax on schooling and housing.
If only the middle class were so lucky. According to measurements by the national statistics institute (INEGI), most of its members earn nowhere near the 500,000-peso threshold, let alone send their children to private school or pay mortgages.