To BNP, Mexico Is Too Optimistic About Growth as Debt Balloons

10/28/16 Bloomberg

4350685550_dbd28c7e50.jpgMexico’s economic projections are way too rosy for BNP Paribas SA. Marcelo Carvalho, an economist at the bank, says Mexico will grow by just 1.5 percent in 2017, the weakest in five years. It’s well below growth of as much as 3 percent forecast in a budget approved by lawmakers last week.

Carvalho isn’t alone. Economists at Barclays Plc to Nomura Holdings Inc. are concerned that Mexico’s longer-term growth estimates may also be unrealistic, threatening to undermine the government’s pledge to stem a debt spiral. S&P Global Ratings and Moody’s Investors Service have already placed their credit ratings for Mexico on negative watch, citing rising indebtedness.

 “A combination of slower growth, higher interest rates, and fiscal disappointment is not good for the debt dynamics and could increase chances of a rating downgrade,” said BNP’s Carvalho.

US Treasury Head Touts Trade, Security in Mexico Visit

9/29/16 ABC News

untitledU.S. Treasury Secretary Jacob Lew made a strong pitch for the Trans-Pacific Partnership trade pact during a visit to Mexico on Thursday. Lew strongly defended globalization, but acknowledged that “some industries, towns, and workers” in both the U.S. and Mexico “are feeling the stress of this change.”

Mexico was seen as a beneficiary of the 1994 North American Free Trade Agreement, and the pact has become an issue in this year’s U.S. presidential campaign. Lew acknowledged a lot of people still have to be won over, saying, “We must win the argument, one that is supported by the facts, that fair trade will grow both of our economies.”

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NAFTA in U.S. campaign spotlight

08/21/2016 The San Diego Union Tribune

NAFTA_logoSince passage of the North American Free Trade Agreement more than two decades ago, U.S.-Mexico trade has risen to unprecedented levels. Trucks cross into the United States laden with shipments of medical devices, electronics, cars, fruits and vegetables, while others roll south into Mexico with loads of U.S. electronic equipment, machinery, plastics and agricultural products.

NAFTA created new jobs, brought consumers a wider range of choices, increased the integration of the U.S. and Mexican economies and enhanced North America’s global competitiveness, supporters say. A report by the Wilson Center in Washington, D.C., states that six million U.S. jobs depend on trade with Mexico. A University of Chicago survey of top U.S. economists showed a majority agreeing that Americans have been better off under the treaty.

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The Hidden Costs of a Possible U.S.–Mexico Trade War

08/05/2016 Wharton, University of Pennsylvania

mexico-usa-flag-montageIn the race for the White House, both Republican Donald Trump and Democrat Hillary Clinton have incorporated skepticism about free-trade pacts into their presidential campaign platforms. While Trump has attracted more attention than Clinton by arguing that the U.S. should seriously consider pulling out of the three-nation North American Free Trade Agreement and the 164-nation World Trade Organization, both candidates have criticized the impact of NAFTA on U.S. jobs growth, and opposed U.S. membership in the Trans-Pacific Partnership (TPP) on the grounds that the 12-nation free-trade bloc, yet to be enacted, would have a harmful impact on U.S. economic growth and job creation.

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Moody’s Sees Mexico Prepared for External Shocks

08/02/2016 The Wall Street Journal

6732357797_64d2ba3cdc_mMEXICO CITY—Mexican economic growth faces headwinds from global market volatility, government spending cuts and higher local interest rates, although the country is fairly well equipped to handle shocks such as lower oil prices and higher U.S. interest rates, Moody’s Investors Service said Wednesday.

“Gross capital flows to emerging markets have started to revert in 2016; although the trend change has been gradual in the case of Mexico, external volatility continues to weigh on growth,” the ratings company said in a report.

A flexible exchange rate, foreign reserves around $177 billion and a recently renewed flexible credit line with the International Monetary Fund leave Mexico relatively well positioned to manage external shocks, Moody’s added.

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Fitch: Mexico Better Than Brazil, Venezuela, Argentina…

06/29/16 Forbes 

Chichen_Itza_Temple_of_Kukulcan_SerpentWhen it comes to managing its debt, Mexico is better than Brazil, basket case Venezuela and Argentina, even as its new government is in the process of resuscitating the economy.

On Thursday, Fitch Ratings reaffirmed Mexico’s investment grade status of BBB+, a credit rating Brazil lost last year after getting it in 2008.

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This Man Is Brilliant. So Why Doesn’t Mexico’s Economy Grow Faster?

07/21/2016 Quarterly Americas

carstens

A great way to understand Agustín Carstens is to hear how he defines himself and his peers —“The Generation of 12.50.”

That may sound obscure to outsiders, but anyone who grew up in Mexico during the 1950s, ’60s or ’70s instantly understands.

For 22 consecutive years, the peso was fixed at exactly 12.50 per dollar — and that number was as much a fixture of Mexican life as Cantinflas, Zonda-brand TVs or the Volkswagen Beetle. “Not everybody in our generation knew how to multiply by 12,” Carstens recalled with a soft chuckle, “but many people could by 12.50.” That is, until one ill-fated day in September 1976, when President Luis Echeverría, his term coming to an end following years of fiscal mismanagement, abruptly decided to end the peg and set the peso free.

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