Bank of Mexico Sticks to 2016 Growth Outlook, Trims 2017 Forecast

5/25/2016 The Wall Street Journal

380px-Agustin_CarstensMEXICO CITY—The Bank of Mexico said Wednesday that it still expects the country’s economy to grow between 2% and 3% this year, but lowered its growth forecast slightly for 2017.

In its quarterly inflation report, the central bank forecast gross domestic product would expand between 2.3% and 3.3% in 2017, less than its previous estimate of 2.5% to 3.5%. The economy grew 2.5% in 2015 and expanded 2.6% in the first quarter of this year.

The main reason for the 2017 change is the lower outlook for U.S. industrial production, which is a driver of Mexican output, Bank of Mexico Gov. Agustín Carstens said at a news conference.

Growth could be better if private consumption in Mexico continues to gain strength, or the economy sees favorable effects from overhauls in areas such as energy, telecommunications and the financial sector. On the other hand, a slowdown in the global economy, and particularly the U.S., and more complex international financial conditions restricting investment could lead to lower growth than expected, the bank said.

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Mexico’s Arca Continental to Bottle, Distribute Coca-Cola in Southwest U.S.

5/26/16 Wall Street Journal 

14716049305_62495b73a5_bCoca-Cola Co. said Wednesday it plans to transfer its soda manufacturing and distribution in Texas and parts of Oklahoma to a joint venture headed by Mexico’s Arca Continental SAB.

The letter of intent with Arca, Coke’s second-largest bottler in Latin America, comes as Atlanta-based Coke accelerates efforts to divest plants and trucks in order to focus on marketing and its more profitable concentrate business.

Arca is the first Mexican bottler to acquire Coke territory in the U.S. but not the first foreign partner. Hong Kong-based Swire Pacific Ltd. is a major Coke bottler and distributor in the Western U.S. and Japan’s Kirin Holdings Co. owns a Coke bottler in the Northeast.

Coke said in February it would sell all of its U.S. manufacturing and distribution by the end of 2017, part of a broader global divestment drive. It paid $12.3 billion in 2010 to acquire the U.S. territories of Coca-Cola Enterprises Inc., its biggest domestic bottler at the time.

With the latest deal, Coke said it has struck deals to refranchise territories representing about 60% of bottler-delivered volume and 41 of 51 cold-fill production plants in the U.S.  Coke still owns bottling and distribution in California and parts of the Northeast, in addition to other territories.

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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.

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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)

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UPCOMING EVENT | What Do Mexicans Think About the U.S. and the World? Results from Mexico, the Americas, and the World 2014-2015

globe north south americaWHEN: Tuesday, May 31, 2016, 3:00-5:00pm

WHERE: 5th Floor Conference Room, Wilson Center

Click to RSVP

The Wilson Center’s Mexico Institute is pleased to invite you to our event “What Do Mexicans Think About the U.S. and the World? Results from Mexico, the Americas, and the World 2014-2015.” Mexico, the Americas, and the World is a public opinion research project undertaken by the Division of International Studies at the Center for Research and Teaching in Economics (CIDE) in Mexico City. The survey, carried out biannually in Mexico since 2004 (and elsewhere in Latin American since 2008), seeks to understand Mexicans’ and Latin Americans’ views on foreign policy and international relations—in a word, on their place in the world. The 2014-2015 edition finds that, among other things, fewer Mexicans report having family members that live abroad and receiving remittances. Despite the rise of anti-immigration sentiment in the U.S., Mexicans’ evaluations of “Colossus to the North” have continued to rise since 2010—apparently an “Obama effect.” Finally, faced with a grave human rights crisis, Mexicans are willing to accept supervision on rights from the UN, OAS, and even—to some extent—from the United States. Two researchers from CIDE will present and discuss the report’s findings.

Speakers
Gerardo Maldonado
Center for Research and Teaching in Economics (CIDE)

David Crow
Center for Research and Teaching in Economics (CIDE)

Moderator
Duncan Wood
Director, Mexico Institute, Wilson Center

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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.

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Mexico Banking on New Market Access Through TPP to Grow Its Economy

5/12/2016 World Politics Review

international currencyMexican Trade Minister Herminio Blancotold a gathering of Mexican and Japanese business leaders earlier this month that “Mexico will become more competitive when the TPP [Trans-Pacific Partnership] takes effect.” In an email interview, Raúl Francisco Montalvo Corzo, the director of the EGADE Business School, Guadalajara, discussed the potential effects of TPP membership on Mexico’s economy.

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