Mexico’s reversal of fortune

January 17, 2014

Ancient Mayan pyramid, KukulcanReuters, 01/17/2014

In Latin America, this looks to be the year of Brazil — thanks to the impending World Cup and presidential elections. But with another lackluster year looming in emerging markets, fans of transformation, growth and investment potential should instead look to Mexico.

Brazil’s president, Dilma Rousseff, is expected to win a second term this year, and its soccer team stands a good shot at victory. But growth has slowed considerably. In the world’s seventh largest economy, reforms are stagnating and the country faces a possible ratings downgrade.

Mexico, by contrast, is in the throes of serious reforms. It will likely lead Latin America with at least 4 percent growth this year and an improving investment outlook. Standard & Poor’s recently boosted Mexico’s credit ratings because of energy reforms that the rating company trumpeted last month as a “watershed moment” for the country. It is becoming a story of inverted fortunes, as Michael Shifter and Cameron Combs of the Inter-American Dialogue recently wrote.

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Has Mexico’s moment finally arrived?

January 9, 2014

Enrique PeñaNieto 2The Guardian, 01/09/2014

Mexico begins the new year bathed in predictions that its “moment” has finally arrived thanks, primarily, to a frenzy of reforms since President Enrique Peña Nieto took office in December 2012.

But beneath the glow, question marks hang over the country because of its longstanding security crisis, rampant poverty, inequality – and even the reforms themselves.

“If things go well, Peña Nieto could go down in history as one of the great reformers of the past 100 years,” says political analyst Raymundo Riva Palacio. “If it does not, the failure will be monumental.”

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A few more pesos, a lot more stress

January 9, 2014

Photo by Flickr user Aleiex

The Economist, 01/04/2014

The Central de Abastos wholesale market is the largest of its kind in the world, sprawling over an area half the size of Mexico City’s airport. Yet on New Year’s Eve, it was still hard to move for the shoppers clogging up the 1-kilometre (1,100-yard) grocery aisle, buying everything from pig’s heads to sugar cane to grapes for that night’s festivities.

Outside, it was another story. People without enough money to shop were sifting through piles of discoloured and discarded avocados and tomatoes, wrapping what was still edible in scraps of newspaper and furtively carrying them off for their own more meagre supper.

For many of these Mexicans, life is getting harder. A fiscal reform that took effect on January 1st introduces a number of new taxes that are chiefly aimed at the rich but end up clobbering the poor. A value-added tax of 16% was slapped on various forms of public transport. In Mexico City the underground “metro” fare had already gone up before Christmas, a 66% increase from 3 pesos (23 cents) to 5 pesos. As part of a government drive to fight obesity (see article) the new levies also include a tax of 1 peso per litre on soft drinks and an 8% levy on some particularly calorific foods.

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Op-Ed: Hello 2014: For Mexico, the hard work starts now

January 3, 2014

Mexican Flag XXLBy Duncan Wood and Christopher Wilson

FT Beyondbrics, 1/3/2014

We will look back on 2013 as a truly historic year for Mexico. The scale of the reform process that was undertaken and largely achieved by President Enrique Peña Nieto is astonishing by comparison not only with other countries around the world today, but also in the context of recent Mexican history. For 15 years Mexico had seemed condemned to endure one of the less palatable elements of democratic systems, legislative gridlock. However President Peña Nieto, through a combination of determination, hard bargaining and political skill, has managed to work with the congress to pass a series of major reforms that do much to put Mexico on the road to modernity and competitiveness.

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BRICs Creator O’Neill Wowed by New Lula’s Success: Mexico Credit

December 19, 2013

120px-Philippine-stock-market-boardBloomberg News 12/18/2013

Jim O’Neill has been tracking economic reform initiatives in countries across the world during his 33-year career on Wall Street. Only a few of them, he said, rank higher than what Mexico achieved this year.

“I can’t think of many other countries that have had a period of such deep reforms,” said O’Neill, who coined the term BRICs while serving as a top Goldman Sachs Group Inc. economist in 2001, correctly predicting a surge in growth for Brazil,Russia, India and China. “Markets are only just really starting to give Mexico any credibility now that the energy reform is going through.”

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A bumpy year ends on a high note

December 13, 2013

The Economist, 12/13/13

Enrique PeñaNieto 2IN A “Three Stooges” episode, a bungled attempt to find uranium ends with Joe merrily sitting on top of a gushing oil well shouting “Oil’s well that ends well.” President Enrique Peña Nieto must be feeling the same way.

Some of the reforms he promised have been clumsier than expected, and the economy has almost stalled in his first year in office. But after an all-night session featuring rowdy protests by the left, on December 11th the Senate approved an epoch-making constitutional reform of energy that went far beyond initial expectations. If the bill passes the lower house, as expected, Mexico will for the first time in 75 years give up an oil monopoly that many of its people see as a national heirloom. Eventually it could bring a wave of much-needed private investment into oil and gas.

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Mexico leftists exit pact, may boost case for energy reform

December 2, 2013

Global Post, 11/28/2013

jesus zambranoThe head of Mexico’s main leftist party said on Thursday it had pulled out of a cross-party pact on economic reform, which could push the government toward a more radical plan to spur investment in the oil industry wanted by conservatives.

Such a move could herald more intense opposition in the street to President Enrique Pena Nieto’s plans to open up the state-run energy industry to greater private investment.

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