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.

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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.

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Can we eliminate Mexico’s informal economy? Should we?

4/28/2016 El Daily Post

peso by Guanatos GwynIt’s hard to imagine a Mexico without an informal sector. But maybe that’s because we haven’t had a chance to even consider such a thing in living memory. There are sound economic reasons for wanting to bring Mexico’s vast “gray economy” into line. Doing it, however, is another story.

The official goal, at all levels of government in Mexico, is to eliminate the informal economy.It’s a goal not just because of the lost tax revenue that off-the-books employment and unregistered businesses cost the public treasury. Nor is it just because informal vendors are a nuisance.

It’s because the immense size of the Mexican informal sector is a drag on economic growth.

he numbers tell the story.

As of the end of 2015, Mexicans who work in the informal sector make up more than half the labor force.

In other words, 53.4 percent of Mexicans who earn money do it without paying taxes or even being registered with the tax service (SAT) of the Finance Secretariat. They are not enrolled in the Social Security System. They are not officially employed or registered as a business.

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TECHNOLOGY AT&T Push Into Mexico Vs. America Movil Looking Good So Far

4/28/2016 Investor’s Business Daily

A&T’s (T)push into Mexico’s wireless phone market seems to be gaining traction vs. incumbent America Movil (AMX), analysts say.

AT&T said it added 529,000 wireless subscribers in Mexico in Q1, with one-fourth the higher-spending postpaid customers who are billed monthly.  Late Tuesday, AT&T reported that its Q1 operating loss was $251 million, amid network investments and subscriber acquisition costs.

“This is now the second consecutive quarter with 500,000 plus net adds, giving us confidence in the execution of the strategy abroad,” said Amy Yong, a Macquarie analyst, in a report. “Profitability is also expected to improve by the second half of 2016. We expect free cash flow contribution could come as early as 2017.”

AT&T and America Movil both acquired more radio spectrum in a radio spectrum auction held by the Mexican government last quarter.

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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.

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BP Results Still Hurt by Gulf of Mexico Spill

4/26/16 Wall Street Journal

BPLONDON— BP PLC’s fatal blowout in the Gulf of Mexico in 2010 continues to haunt the company, helping to drag its quarterly earnings into a second consecutive loss and overshadowing the British oil giant’s progress on cost cuts.

BP on Tuesday said its earnings took a $917 million hit in the first quarter related to the Deepwater Horizon explosion that killed 11 workers and caused a massive spill in the Gulf of Mexico, a disaster that changed the course of the British oil giant and cost the company $56.4 billion to date.

The additional spill costs and the weakest oil prices in over a decade cast a cloud over BP’s financial performance, despite signs that heartened investors and caused the firm’s shares to jump over 4%.

Counting the Deepwater Horizon costs, BP said its equivalent of net earnings was a $485 million quarterly loss. Stripping out those and other one-time charges, BP had a profit of $532 million in the first quarter, significantly beating analysts’ consensus forecast for a loss of $140 million.

The spill forced the company to sell more than $40 billion in assets, pull back its ambitions and craft the business around a smaller set of high-value oil and gas fields.

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Meet Mexico’s New Innovators

George W. Bush Institute

The two friends, Jaime Rodas and Roberto Hidalgo, inseparable since high school, live in an apartment-turned innovation pad on the edge of a leafy neighborhood in Mexico City. They contribute to Mexico’s big tech inventions, like building websites for social causes that include teaching the public how to hold government accountable.

“People don’t even know who represents them,” Jaime tells me as he walks me through the apartment, with rooms turned into workspaces, laboratories for experiments. “They have no clue who their representatives are, or even what they’re supposed to do, like be their voice.”

The new narrative

Jaime and Roberto, ages 27 and 29, represent a new face of Mexico. They work out of their apartment, which they share with Roberto’s elderly miniature Schnauzer, Dharma. They are part of a generation of young, high-tech millennials, a group that is quietly expanding into an important global force of innovators. Already there are some 600,000 high-tech professionals in Mexico, and about 115,000 engineering and tech students graduate each year – a vast talent pool in the making.

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Take a look at the tool mentioned in the article that helps Mexicans find out who they are represented by and how to contact them!