Mexico’s Economy Remains Weak in First Quarter

May 23, 2014

Wall Street Journal, 5/23/14peso by Guanatos Gwyn

MEXICO CITY—Mexico’s economy remained weak in the first quarter as the economic slowdown in the U.S. weighed on the country’s vital export engine and the impact of new taxes hit domestic demand.

Gross domestic product expanded 0.28% in the January-to-March period, seasonally adjusted from the previous quarter, the national statistics agency said Friday, below expectations of 0.4%. The increase translates into an annualized seasonally adjusted rate of 1.1%.

The economy expanded 1.8% from the first quarter of 2013, helped by the shift in the Easter holiday this year to April. Adjusting for the calendar effect, growth was 0.6% from a year earlier.

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Reality check for Mexico

May 23, 2014

arrows - different direction - choiceFinancial Times, 5/22/14

So Mexico, Aztec tiger, implementing far-sighted structural reforms that will ramp up economic growth, right?

Well yes, but prepare to be patient. The central bank, Banxico, has just delivered a reality check: growth this year will be in the 2.3 to 3.3 per cent range, not the 3 to 4 per cent previously forecast.

Last year, just as sentiment about Mexico was surging with a can-do new president preparing to boldly reform where no president had reformed before, the economy went into an unexpected tailspin – a combination of a new government not unleashing spending, and impact from the US.

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Mexican Central Bank Sees Incipient Economic Recovery

May 12, 2014

finance-market_dataThe Wall Street Journal, 5/9/14

Mexico’s central bank said Friday an incipient economic recovery is under way, citing an improvement in exports and government spending, although many economists remain skeptical whether Latin America’s second-largest economy is clearly picking up after more than a year of anemic economic growth.

Most of the five-member board agreed that the economy started to improve at the end of the first quarter and that the recovery will continue in the coming months, the minutes of its most recent policy meeting showed.

The central bank’s comments come as most economists, and independent bodies such as the Organization for Economic Cooperation and Development, have been lowering their growth forecasts for Mexico for this year. Some economists have been arguing that the Mexican economy has been in a recessive period over the last nine months, something the government denies.

Finance Minister Luis Videgaray has repeatedly said Mexico is growing and generating employment, although at a still unsatisfactory rate. The government, led by President Enrique Peña Nieto, is badly in need of results on the economic front: In its first year in office last year, the economy expanded 1.1%, much lower than the 3.5% growth initially expected. In the first two months of 2014, growth amounted to 1.4%.

The central bank appeared Friday to support the government’s view that the economy is picking up. It said auto industry exports, a main factor of the country’s export engine, rose in February. Most board members argued that private consumption likely improved gradually in the first quarter. Government spending is also seen gaining pace after last year’s delays.

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NAFTA: Necessary to Cement Mexico’s Economic Reforms but Not Sufficient for Growth

March 19, 2014

NAFTAAmerica’s Trade Policy and the Woodrow Wilson Center, 03/18/14

Mexico has been an independent nation for over 200 years now and we Mexicans have seen everything: periods of light and periods of darkness, eras of growth and stages of crises, times of peace and times of violence, moments of optimism and ill-fated intervals. There have also been innumerable grandiose plans, the majority of which end up supplying nearly always the poorest of results. Mistrust in the government is not recent nor is it the product of chance.

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Mexico Says Economy Likely Grew 1.3% in 2013

February 3, 2014

Share market prices shown on anThe Wall Street Journal, 1/31/14

Mexico’s Finance Ministry said Thursday it believed the economy continued its recovery in the fourth quarter, growing 1.5% from a year before on greater external and domestic demand. In its quarterly report on public finances, the ministry said the increase would bring full-year 2013 growth to 1.3%, which is the slowest expansion since the 2009 recession.

A sluggish first half in the U.S. limited demand for Mexican exports, particularly of manufactured goods, while government spending delays following a change of administration contributed to the slump in the Mexican construction industry.

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Mexico has the lowest tax collection in Latin America (Spanish)

February 20, 2013

50-pesosExcelsior, 2/20/2013

México es uno de los países con los niveles de recaudación más baja en América Latina, incluso “estamos por debajo de Haití después del terremoto”, informó el experto Jorge Alatorre Flores.

El secretario del Instituto de Investigación en Política Pública y Gobierno del Centro Universitario de Ciencias Económico Administrativas (CUCEA) explicó que el pago de impuestos está concentrado en la Población Económicamente Activa (PEA) formal.

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World Leaders Meet in a Mexico Now Giving Brazil a Run for Its Money

June 18, 2012

 

MEXICO CITY — Mexicans looked on with envy in recent years as Brazilians won a reputation as Latin America’s chosen people. With a surging economy and a prominent place on the world stage, Brazil was the country poised for greatness while Mexico remained mired in bloodshed and destitution…

Last year, Mexico’s economy grew faster than Brazil’s, and it looks set to outpace its larger Latin rival again in 2012…

Economically, Mexico does not appear as grim a place anymore.

“The best way to improve your image is G.D.P. growth,” said Luis de la Calle, a former Mexican trade negotiator and an economic analyst here.

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US recession fears loom over Mexico

August 8, 2011

Reuters, 8/8/11

MEXICO CITY, Aug 8 (Reuters) – Mexico tried to reassure investors that a global markets rout would not spark an economic crisis even as recession fears in the United States, its key trading partner, pounded Mexico’s currency and stocks.

Mexico’s peso sank to a seven-month low on Monday and stocks tumbled almost 6 percent in the first day of trading after Standard & Poor’s stripped the United States of its top-tier credit rating.

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Mexico’s Coca-Cola Femsa profit rises 6 percent

July 20, 2011

Reuters, 7/20/11

Mexico’s Coca-Cola Femsa (KOFL.MX) (KOF.N), the largest Coke bottler in Latin America, reported a 6 percent rise in second-quarter profit as higher sales offset rising costs of raw materials.

“Our performance was supported by volume growth across all of our divisions and our ability to implement pricing initiatives over the past several months throughout our main markets,” Chief Executive Officer Carlos Salazar said in a statement.

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New Report: NAFTA and the Mexican Economy

November 4, 2008

Congressional Research Service, 11/4/2008

The North American Free Trade Agreement (NAFTA), in effect since January 1994, plays a very strong role in the bilateral economic relationship between Mexico and the United crs-logoStates. The two countries are also closely tied in areas not directly related to trade and investment such as security, environmental, migration, and health issues. The effects of NAFTA on Mexico and the state of the Mexican economy have important impacts on U.S. economic and political interests. As NAFTA approaches its 15th anniversary, a number of policymakers have raised the issue of revisiting NAFTA and renegotiating parts of the agreement. Some important factors in evaluating NAFTA include the effects of the agreement on Mexico and how these relate to U.S.-Mexico economic relations. In the 110th Congress, major issues of concern have been related mostly to economic conditions in Mexico, the effect of NAFTA on the United States and Mexico, and Mexican migrant workers in the United States.

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