Mexico’s star wanes as reforms underwhelm, Brazil rises

07/13/16 Reuters

Flag-Pins-Mexico-BrazilForeign investors in Latin America are warming to Brazil as a promising turnaround bet while souring on Mexico and its landmark energy reform that has yet to deliver.

Brazil has yet to recover from its worst recession in decades, inflation and interest rates remain among the highest in the region and it is saddled with a bloated public sector. In contrast, Mexico’s economy is growing at around 2 percent, has lower fiscal deficits and sounder public finances.

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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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Fresh Thinking on Drug Use

4/12/16 Human Rights Watch

drugsFor the past decade, Mexico has pursued a “war on drugs” with catastrophic consequences — drug-related violence has taken the lives of tens of thousands of people. Last month, the Supreme Court of Mexico ruled that prohibiting the personal use of marijuana violates a constitutional right to the “free development of one’s personality.” The ruling, while limited to marijuana, represents an important step toward a new approach to drug policy that could help make Mexicans healthier and safer.

We hope that Brazil´s Supreme Court will follow Mexico’s example. The Brazilian court is considering whether a law that makes possession of drugs for personal use a crime violates a constitutional right to privacy. If the court strikes down the law, Brazil will join a growing list of countries that are liberalizing their policies toward drug use – from Portugal, which in 2001 decriminalized the personal use of all drugs without apparent ill effect, to Uruguay, which in 2013 became the first country fully to legalize and regulate marijuana.

Even the United States, traditionally one of the most zealous enforcers of a prohibitionist approach to drug control, is starting to soften. Almost half of its 50 states have legalized marijuana in some form, and the Obama administration is taking a hands-off approach to the states’ experiments.

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Mexico foreign direct investment races ahead as Brazil sputters

8/25/15 Financial Times

social classMexico and Brazil dominate foreign direct investment flows into Latin America, but their FDI prospects could be heading in opposite directions. While Mexico is making hay with China’s declining cost competitiveness in manufacturing, Brazil is slipping behind.

In 2014, Mexico attracted 366 greenfield investment projects totalling an estimated $33bn and Brazil 322 projects at $18bn, according to fDi Markets, an FT data service. Together they mopped up nearly 60 per cent of capital expenditure on new projects or expansions of existing facilities in Latin America and the Caribbean last year.

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Brazil cleans up its act, so should Mexico

8/21/15 Financial Times

Flag-Pins-Mexico-BrazilNobody here can do the maths!” Alberto Youssef despaired in an expletive-filled phone conversation wiretapped by Brazilian prosecutors three years ago. Mr Youssef, since convicted of helping to move $444m to offshore bank accounts in thousands of separate transactions, is a money launderer-turned-whistleblower in Brazil’s so-called Petrolão — the sprawling corruption scandal that has hit the highest levels of government.

The scandal, which saw billions of dollars skimmed from construction contracts taken out by Petrobras, the state-controlled energy company, to be used as kickbacks for politicians, has filled Brazil’s streets with protesters and led to calls for the impeachment of Dilma Rousseff, the most unpopular president in Brazilian history. Quite some maths.

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A false war fades: the end of Brazil-Mexico rivalry?

6/10/15 Financial Times – beyondbrics

Flag-Pins-Mexico-BrazilFor much of the past two decades, Brazil and Mexico seemed at times to be on a collision course. Diplomats from Latin America’s two largest nations were often preoccupied, if not obsessed, with a competition for an elusive role as regional leaders and players in the post-Cold War shifting global scene. The 2013 battle for the post of director general at the World Trade Organization, won by Brazilian diplomat Roberto Azevêdo over Mexican Herminio Blanco, a former trade minister, left plenty of hurt feelings. Ironically, the dispute for influence also led to convergence. The 2011 creation of the Community of Latin American and Caribbean Nations (CELAC), proposed by Mexico to affirm its Latin American identity and counter a perceived Brazilian effort to separate it from the region, was warmly embraced in Brasília as a way project leadership by promoting formats that excluded the US.

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