Mexico Inflation Slows to Target Range for First Time This Year

April 9, 2014

pesos

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.

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How is Mexico’s economy? Depends on where you’re standing

February 11, 2014

people walking down city street - blurThe 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.

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Public spending, U.S. recovery to help Mexico in 2014 – Carstens

December 3, 2013

Agustin_CarstensReuters, 12/3/2013

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.

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IMF urges Mexico to undertake further tax reform

November 27, 2013

Reuters, 11/26/2013

imfMexico’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.

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Mexico gears up for energy reform

October 31, 2013

energy - oil pumpsThe 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.

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Emerging-Markets Investors Sour on Mexico Stocks

October 16, 2013

currency - coinsThe 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.

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Middle worth

October 16, 2013

woman with shopping bags and credit cardThe 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.

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Citigroup’s Losses on Loans to Mexico Homebuilders May Increase

October 16, 2013

citigroupBloomberg News, 10/15/2013

Citigroup Inc. (C:US), the third-largest U.S. bank, may face more losses on loans to Mexico’s three largest homebuilders as defaults mount and officials of the Latin America nation dash hopes for a bailout.

About half of the $168 million in loan-loss reserves Citigroup set aside in the third quarter for Latin America will be used to cover souring loans made to those firms, Chief Financial Officer John Gerspach said today on a conference call. At the end of September, the bank had less than $300 million of the assets, mostly construction loans, he said.

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Mexico Drug Wars Don’t Scare Hotel Investors: Real Estate

October 1, 2013

grand riviera princess hotelBloomberg, 10/01/2013

Mexico’s ocean side resorts and Mayan ruins are luring more visitors from abroad even as drug violence plagues parts of the country. The resurgence is spurring a wave of new investment in the hotel industry.

Hyatt Hotels Corp. is opening two resorts in Mexico later this year, and Starwood Hotels & Resorts Worldwide Inc.  is planning to increase its luxury portfolio there by 50 percent. Blackstone Group LP’s La Quinta chain also wants to add hotels in the country to meet rising business demand as Toyota Motor Corp. and other companies open new factories.

Hoteliers and investors are counting on a continued surge in tourism across Mexico, where gains in hotel room rates outpaced increases in the rest of Latin America even as the economy slowed this year. Travel growth is being driven by a rising middle class, expansion by business and visitors from countries including China who are undeterred by the violent crime gripping northern Mexico.

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Death of 99% Pemex Tax Soothes Oil Monopoly Fate: Mexico Credit

September 27, 2013

pemex2Bloomberg, 9/27/2013

President Enrique Pena Nieto’s plan to reduce state-owned oil producer Petroleos Mexicanos’s tax burden while giving it first rights on prospects is enriching investors with Mexico’s biggest bond-market gains.

Pemex’s $2.3 billion of notes due in 2035 have returned 9.9 percent in September, the most among $84 billion in outstanding dollar-denominated bonds issued by 120 Mexican corporate borrowers. The advance is also quadruple the 2.4 percent gainfor the Bloomberg USD Emerging Market Corporate Bond Index. (BEMC)

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