Mexico’s Economy Picked Up Pace in Third Quarter

shutterstock_101964346Wall Street Journal 11/20/2015

MEXICO CITY—Mexico’s economy accelerated in the third quarter, growing more than expected with gains in industry, services and agricultural production contributing to an increase in output from the second quarter and from a year earlier.

Gross domestic product, a broad measure of output of goods and services, increased 0.8% seasonally adjusted from the second quarter, and was up 2.6% from the third quarter of 2014, the National Statistics Institute said Friday.

The expansion from the second quarter, which translates into an annualized rate of 3%, was the fastest in two years and the ninth consecutive quarter of growth.

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Go Ahead, Sell the Peso, Mexico Doesn’t Care What You Do Anymore

Pesos by Flickr user AleiexBloomberg Business 11/23/2015

By most traditional economic gauges, little is going right today for Mexico. Growth is sluggish, oil exports are falling and credit markets have started to dry up.

Yet beneath the surface, a surprising and little-understood transformation is ushering in one of the country’s most important developments in years: the peso’s age-old link with inflation has been broken. No longer does a plunge in its value trigger an automatic surge in consumer prices. In fact, the most recent data suggest that it causes almost no inflation at all.

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Keynote Speech: Opportunities and Challenges for Mexico Today

10/29/2015 The International Trade Journal

By Diana Villiers Negroponte


Since its pre-colonial history, Mexico has demonstrated two contrary tendencies: the outward-looking, global trader and the protective, nationalist instinct. Today, the seven major constitutional reforms of the PRI government reflect the former. However, the teacher’s union, some presidential advisors, and the criminal justice system reflect a preference for the latter. The more progressive sectors of Mexican society assert the need to participate in the global economy, but latent protective and nationalist tendencies throw up challenges. This article examines several contemporary examples of each tendency and demonstrates how they coexist uneasily in modern Mexico.

This article was published by our Advisory Board Member Diana Villiers Negroponte in the International Trade Journal (Volume 29, Issue 5, 2015). Click here to read the full article


IMF cuts Mexico economic outlook as oil output falls

11/17/2015 Reuters

imfThe International Monetary Fund on Tuesday trimmed its economic growth forecasts for Mexico citing a decline in oil production, which funds nearly a third of the country’s budget.

In its yearly analysis of Latin America’s second-largest economy, the IMF also urged the central bank to taper foreign exchange intervention aimed at stemming the peso’s deep slide, arguing it would sap reserves over time.

The IMF lowered estimates for Mexico’s economic expansion to 2.5 percent for next year from 2.8 percent predicted in October, citing expected cuts in production at state-owned oil giant Pemex. It also lowered this year’s forecast to 2.25 percent, from 2.3 percent previously.

The Fund said growth could be even lower if capital flow volatility spikes, domestic oil production shrinks further, or the economy of the United States, Mexico’s chief export market, expands more slowly than expected.

The Fund praised the Bank of Mexico for keeping rates at a record low as growth has wobbled and inflation remains tame. But it recommended an end to daily dollar auctions to support the peso, which in the past year has slumped 30 percent against the dollar.

The central bank’s interventions have shrunk reserves to $182 billion as of September from $195.7 billion at the end of 2014, the IMF said.

“The current pace of intervention is not sustainable over the medium-term,” IMF staff wrote in the report.

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Femsa Overtakes America Movil to Top Mexico Benchmark Index

11/18/2015 Bloomberg

drawing bar chartMexican conglomerate Fomento Economico Mexicano SAB has passed billionaire Carlos Slim’s telecommunications giant America Movil SAB to become the most weighted stock on Mexico’s benchmark IPC Index.

The $34 billion company, known as Femsa, now has a 12.9 percent weight on the IPC, compared to America Movil’s 12.8 percent. While the current balance of the benchmark IPC index took effect Sept. 1, Femsa pulled past America Movil in weighting this month after the Monterrey-based company’s shares surged over the period and Slim’s telephone operator slumped. The next re-balancing will take effect Dec. 1.

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Here’s How Amazon is Figuring Out Mexico’s Tricky Market

taxes accounting businessFortune 11/13/2015

Amazon, which launched in Mexico in June 2015, is one of several global companies that is paying close attention to Mexico’s rapidly growing e-commerce market. Sitting in a conference room in a tall office tower with a view of Polanco and the sprawl of Mexico City, Juan Carlos Garcia, the 47-year-old CEO of Amazon Mexico, explains, “We saw a big opportunity in the Mexican market. It’s a market which right now is at $12 billion and growth has been in the double digits.”

Mexico benefits from a number of unique demographic and geographic characteristics that make it one of the most promising e-commerce markets in Latin America. The nation’s proximity to the U.S. makes it an easy target for retailers north of the border looking to boost their international customer base. At the same time, the rapidly expanding group of young, working-age Mexicans is quickly becoming a target market for global retain chains.

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Mexico industrial output up in September for 4th month

11/11/2015 Reuters

mexican pesos

Nov 11 (Reuters) – Mexican industrial output expanded in September for the fourth month in a row as stronger mining, utilities and construction offset a decline in factory output.

Industrial output in Latin America’s No. 2 economy rose 0.4 percent compared to August, the national statistics office said on Wednesday, just above analysts’ expectations and a 0.2 percent rate in August.

The industrial output’s factory output component shrank 0.2 percent in September from August, its weakest since May. Mexico sends nearly 80 percent of its exports, mostly factory goods, to the United States.

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