Mexico’s middle class is struggling

07/22/21

Source: The Economist

Fifteen years ago Maria, a school secretary, and her husband Samuel, a technician at an electronics firm, had just bought a car when they found out she was pregnant. They couldn’t afford the payments with a baby on the way, so they returned it. Today the couple and their three children live in a three-bedroom house in Tesistán in western Mexico, and have just bought a second set of wheels. They eat out once a fortnight and have a subscription to Netflix, a video-streaming site. “My children used to ask me if we are poor and I would say ‘No, we have food, a roof over our heads, clothes, and we are moving ahead’,” says Maria. “For me and my husband this is the best moment we’ve had yet.”

In recent decades Mexico, like many emerging markets, has witnessed the growth of its middle class. Incomes have risen—Maria and Samuel bring in around 20,000 pesos ($1,000) a month, an increase of more than 50% in real terms since they first got together 16 years ago. More people like them have bought cars, fancy TVs, smartphones and nice clothes. But recently the middle class, long neglected by politicians, has had two setbacks, thanks to covid-19 and the policies of President Andrés Manuel López Obrador.

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Energy reform fears trip up Mexico’s peso

07/13/2021

Source: Reuters

July 13 (Reuters) – Mexico’s peso lost 1% on Tuesday on concerns over more government interference in the energy sector, while most other Latin American currencies fell as rising U.S. inflation raised fears of monetary policy tightening by the Federal Reserve.

Mexican President Andres Manuel Lopez Obrador said he plans to send a constitutional reform to Congress, widely opposed by independent power firms and investors on grounds that it would hurt competition.

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Analysts see Mexico inflation at double cenbank’s target in 2021, despite rate hikes

07/13/2021

Source: Reuters

MEXICO CITY (Reuters) – Though the Bank of Mexico hiked its key interest rate last month to stem surging inflation, analysts have increased their forecasts for Mexican inflation to around 6% for year end, double the central bank’s target.

Banxico, as the central bank is known, unexpectedly raised the benchmark interest rate by 25 basis points to 4.25% at its June 24 monetary policy meeting, saying it was necessary to avoid adverse effects on inflation expectations and citing price formation in the United States.

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UPDATE 2-Mexico central bank minutes show newest board member’s dovish thinking

07/09/2021

Source: Yahoo! Finance

MEXICO CITY, July 8 (Reuters) – New Bank of Mexico board member Galia Borja emerged as one of two dissenting doveish voices when the central bank unexpectedly raised interest rates last month due to concerns about inflationary pressures, minutes from its latest monetary policy meeting showed Thursday.

With the votes of Banxico governor Alejandro Diaz de Leon and members Irene Espinosa and Jonathan Heath, the bank’s five-member board decided by a majority to raise the benchmark interest rate by 25 basis points to 4.25% at the June 24 meeting.

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U.S. monitor flags ‘weaknesses’ in Mexico’s drive to boost worker rights

07/08/2021

Source: Reuters

MEXICO CITY/WASHINGTON (Reuters) -Mexico’s effort to stamp out employment contracts signed behind the backs of workers has “significant weaknesses” and should be reformed, said a U.S. advisory board that monitors Mexico’s compliance with a new regional trade pact.

The Independent Mexico Labor Expert Board (IMLEB), which was created by the U.S. Congress, flagged a disputed ballot at a General Motors plant as an example of shortfalls in a new Mexican labor law requiring “legitimation” votes in a bid to end the widespread practice of unions and companies signing contracts without workers’ knowledge.

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U.S., Mexico settle first labor complaint under USMCA

07/08/2021

Source: Politico

The U.S and Mexico have agreed to closely monitor a new union vote for workers at a General Motors facility in central Mexico after a weekslong investigation into complaints that their rights had been violated during a similar referendum earlier this year.

The resolution announced Thursday marks a milestone for resolving labor disputes under the landmark U.S.-Mexico-Canada Agreement and comes as U.S. Trade Representative Katherine Tai concludes meetings with trade and labor officials in Mexico City to commemorate the deal’s one-year anniversary.

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Lukoil buys Fieldwood out of Mexico offshore project

07/07/2021

Source: Upstream

Russian oil producer Lukoil has agreed to pay $435 million and additional unspecified incurred development costs to acquire a 50% operating stake in two Mexican shallow-water blocks from US independent Fieldwood Energy.

The blocks are part of the Area 4 project in the Gulf of Mexico and host the Ichalkil and Pokoch fields.

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The unknown winners of Mexico’s energy reform

07/07/2021

Source: El País

It was a perfect opportunity. When Mexico opened its market to allow private companies to produce and sell energy for the first time in decades, two US executives suddenly found themselves in a privileged position. Mexico would be buying significant amounts of natural gas from its northern neighbor and the person in charge of negotiating the contracts was someone they knew well: an ex-colleague from more than 15 years earlier, with whom they’d worked with in another recently liberalized market.

The contracts were awarded under Guillermo Turrent, ex director of CFEI, who had worked with a high-ranking executive and the founder of Whitewater at Royal Dutch Shell in San Diego, California during 2000 and 2001. Details of their employment and behavior while at Shell is documented by the Federal Energy Regulatory Commission (FERC), where a case remains open that examines the company’s purported overcharging of the state of California for electricity in the negotiation of a long-term contract. During that time, just a year after opening its market to private competition, California suffered an electricity crisis that included widespread blackouts that affected millions of residents and caused record price increases for power that almost bankrupted the state government.

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Mexico inflation almost unchanged in June, well over cenbank target

07/08/2021

Source: Reuters

MEXICO CITY, July 8 (Reuters) – Mexican annual inflation was virtually unchanged in June, slowing slightly less than expected and remaining well above the central bank’s target rate, official data showed on Thursday.

Annual consumer price inflation in Latin America’s no. 2 economy dipped last month to 5.88% from 5.89% in May, according to figures published by national statistics agency INEGI. A rate of 5.86% had been forecast in a Reuters poll of analysts.

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Mexico says cryptocurrencies are not money, warns of risks

06/28/2021

Source: Reuters

MEXICO CITY, June 28 (Reuters) – Mexican financial authorities on Monday said that crypto assets are not legal tender in Mexico and are not considered currencies under current laws, warning that financial institutions that operate with them are subject to sanctions.

The joint statement by the Bank of Mexico, finance ministry and banking regulator comes after Mexican billionaire Ricardo Salinas Pliego on Sunday said his banking business, Banco Azteca(ELEKTM.UL), may begin using bitcoin, which would make it the country’s first bank to start accepting the cryptocurrency.

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