Building Borders That Foster Security And Prosperity In North America

5/24/2016 Forbes

san-ysidro-border-crossing-by-flickr-user-otzbergBy Earl Anthony Wayne and Christopher Wilson

Canada, Mexico and the United States are collaborating to enhance security and foster prosperity at North America’s borders, while respecting each nation’s sovereignty.  Prime Minister Trudeau, President Peña Nieto and President Obama can give this effort a big boost when they meet for the North American Leaders Summit (NALS) on June 29 in Canada.  Given the contentious nature of the public and political debates about border security right now, it will be especially important for the leaders to articulate clearly what it means to build twenty-first century borders that are smart, effective, and meet both the security and competitiveness needs of North America. They should also bless a strong, substantive work agenda to make those objectives reality.

The three countries trade some $3.6 billion in goods and services each day.  Over a million citizens of the three nations cross the borders as part of their daily routine.  Border management tasks are enormous.  But, officials, the private sector and the many states, provinces and cities that benefit from border trade and travel see the tremendous value of a North America in which borders are places of connection and cooperation at least as much as division.  Around our borders, the three governments fight illicit activity; help our economies by facilitating legal trade and transit; and work to protect all three societies from threats ranging from terrorism to invasive species and diseases.

Read more…

Mexico FDI rises to record high in first quarter

5/25/16 Reuters

mexico-statesMay 23 Foreign direct investment (FDI) in Mexico rose 4.3 percent to $7.896 billion, the Economy Ministry said on Monday, adding that it was a record high for the first quarter.

The increase in FDI, which was above the $7.5 billion in last year’s first quarter, includes $2 billion that Teva Pharmaceutical Industries paid to acquire Rimsa, a Mexican pharmaceutical firm. Teva struck the deal in October.

The United States accounted for about 29 percent of the country’s total FDI in the first quarter, followed by Israel, Spain, Germany and South Korea. (Reporting by Anna Yukhananov)

Read more… 

Global Investment Guide: How To Invest In Mexico

5/18/16 Forbes

Mexico BricksLooking at the country through an economist’s lens, Mexico’s economy can be described as mostly predictable and rarely volatile. However, the same cannot be said of Mexico’s stock and bond markets and currency. Given strong links to the United States’ economy, Mexico’s macroeconomic variables tend to move broadly in conjunction with the ups and downs of its northern neighbor. When the U.S. is expanding, so is Mexico; if the U.S. is in a recession, so is Mexico. However, Mexico’s asset prices tend to act and react to their compatriot emerging market asset classes – which are much more volatile. That said, Mexico’s principal asset classes tend to be “low beta” versions relative to most emerging markets (EM), so that when EM equities or bonds do very well, Mexico lags, but when EM sells off, Mexico acts like a relative safe haven. The Mexican peso is another matter.

Mexico has several things going for it. As mentioned above, the country has forged strong links with the U.S., especially after the formation of NAFTA. As the country has an abundance of relatively cheap labor, it was an ideal, close-proximity destination for manufacturing plants from the U.S. and Canada. Through time, the country has benefited from technology transfer and has been able to increase the skills of its workforce. Second, for most of the last few decades, well-trained and well-respected policymakers have been at the helm of Mexico’s central bank and finance ministry. Under their leadership, Mexico has been able to weather several global crises and also transitions to different presidential leadership, by implementing conservative fiscal policy and prudent monetary policy.

Read more… 

Op-Ed | Getting North America Right

5/9/2016 Mexico Institute blog, Forbes.com

By Earl Anthony Wayne, Public Policy Fellow, Wilson Center

nafta (2)When the leaders of Canada, Mexico and the United States meet on June 29 for a North American Leaders Summit (NALS), they will have two big tasks: 1) to explain clearly why cooperation between the three countries is of great value; and 2) to give clear directions to their officials to do the hard technical work so that cooperation produces solid results for economic growth and competitiveness, for mutual security, for the shared continental environment, and for international cooperation where we can do more together than individually.

Since Mexico hosted the last so-called “Three Amigos” Summit in 2014, the tone in the U.S. domestic political debate has turned very critical of cooperation across the continent, whereas the actual collaboration and mutual understanding between the governments has improved.  The potential to help make all three countries more competitive in the world and to become a model for regional cooperation has increased, even as the electoral campaign attacks on the relationship with the United States’ two top export markets sharpened starkly.

Read more…

Mexico is Latin American winner as Brazil spirals

4/29/16 CNN Money

South-America-BrazilIt’s a tale of two economies for Latin America’s two largest countries.

Brazil is in a political crisis and severe recession. Its president, Dilma Rousseff, could be impeached this year. Brazil’s debt has also been downgraded to junk status.

Meanwhile, Mexico is growing, politics are relatively stable and its debt was upgraded in 2014.

“Right now Mexico and Brazil are as different as they come, this is day and night,” says Alberto Ramos, head of Latin America economic research at Goldman Sachs.

Those diverging narratives bore out Friday. Officials in Brazil announced that unemployment hitnearly 11% in the three months ending in March, way up from about 8% a year ago. Mexico’s unemployment rate is 3.7%.

Mexico’s economy grew 2.7% between January and March compared to a year ago, according to government figures released Friday. That’s even slightly better than what most economists expected.

That’s not stellar growth but it’s a lot better than Brazil’s economy, which shrank 3.8% in the fourth quarter last year and its central bank estimates the economy will contract 3.5% this year.

Read more… 

Mexico GDP Beats Forecasts on Consumer Spending; Peso Rises

4/29/16 Bloomberg Business

pesoMexico’s economy expanded more than analysts forecast for the third time in four quarters as strength in domestic consumption offset weak exports and a drop in oil output. The peso extended its gain, rallying to the strongest level in more than four months.

Gross domestic product rose 2.7 percent in the first quarter from a year earlier, according to preliminary figures released by the national statistics institute Friday. That compared with the 2.4 percent median forecast of 19 economists surveyed by Bloomberg. From the previous quarter, GDP expanded 0.8 percent. The institute will release final GDP figures May 20.

Mexican consumers are spending more as inflation holds near a record low and remittances rise amid weakness in the peso. The country has been a bright spot for growth compared with some Latin American economies such as Brazil, and in an interview last week, central bank Governor Agustin Carstens said it may get even better as factors that have held back the expansion, such as weak exports, begin supporting growth.

Read more…

Weaker Peso Fails to Boost Mexican Exports

4/26/16 Wall Street Journal

peso by Guanatos GwynMEXICO CITY—The steep slide of the Mexican peso has failed to boost the country’s manufacturing exports, primarily because of a sluggish U.S. industrial sector coupled with close integration of supply chains across the U.S.-Mexico border.

Economists say the peso’s 24% depreciation against the U.S. dollar in the past 18 months should make Mexican-made goods more competitive. But the reaction has been slow because of close synchronization of U.S. and Mexican business cycles.

Exports of manufactured goods, which account for 90% of Mexico’s total exports, fell 6.5% in March from the year-earlier month, the government statistics institute said Tuesday. The drop was led by a 10% fall in auto industry exports.

Imports of intermediate goods, equipment and machinery—all key components for manufacturing exports—also fell in March, contributing to a $155 million trade surplus for the month.

Despite Mexico’s free-trade agreements with 46 countries, including the European Union and Japan, about 80% of its $380 billion annual exports go to the U.S.

A recent Bank of Mexico analysis showed that demand for Mexican components in the U.S. export sector has more of a short-term impact on Mexican exports than changes in the peso-dollar exchange rate.

Read more…