Mexico Inflation Rises More Than Expected in Early September–Update

Nasdaq 9/25/2015

MEXICO CITY–Mexico’s consumer prices rose more than expected in early September, although annual inflation hit a new low, giving room to the Bank of Mexico to hold rates unchanged at record-low levels. The consumer-price index increased 0.32% in the first half of September, lowering 12-month inflation to 2.53% from 2.59% at the end of August, the national statistics agency said Thursday. The data came in above the 0.28% median estimate of 15 economists polled by The Wall Street Journal. Consumer prices rose more than expected in the first two weeks of September mainly due to increases in non-food goods, which suggests the heavy depreciation of the peso in recent weeks is starting to impact some prices by making imports more expensive.

The peso reached a fresh new low against the U.S. dollar in early trading Thursday. In the last year, it has lost around 23% of its value against the greenback.

Read more…

Mexican President urges UN to reform Security Council, step up action against world drug problem

World Politics Review 9/24/2015

energy - oil_rigEarlier this month, the Mexican government submitted a budget to cut spending in 2016, including reduced investment in the state oil company Pemex, given the drop in global oil prices. In an email interview, Amb. Antonio Garza, former U.S. ambassador to Mexico and currently counsel in the Mexico City office of White & Case LLP, discussed Mexico’s economy and the impact of the oil shock.

WPR: How have declining oil revenues affected Mexico’s budget and spending power?

Antonio Garza: Historically, Mexico has relied on oil revenues to fund roughly one-third of its budget. This arrangement was fairly stable when oil prices were high, but as prices began plummeting last summer, so did the amount of money coming into government coffers, amounting to a roughly 36 percent year-on-year decrease for the first six months of 2015. The drop was steep, but things weren’t as bad as they could have been. Certain policies and outcomes—such as the government’s widespread hedging program, an uptick in non-oil taxes from the 2013 fiscal reform and a revenue surplus from the gasoline price cap—certainly helped lessen the budgetary pressure.

Read more… 

Energy reform will unleash Mexico’s economy – Minister of Economy

08/20/14 By Ildefonso Guajardo. Dallas Morning News

President Enrique Peña Nieto took office in late 2012 and set to work on an ambitious agenda for change and transformation. In under two years, the administration has enacted structural reforms to free up domestic markets, making the country more productive and competitive and enabling our citizens to benefit through better jobs, higher wages and rising standards of living.

This month, Mexico put in place new laws that govern the opening of the energy and electricity sectors. This historic moment affirms our standing as an emerging economic power and signals the beginning of a new era of growth and prosperity for the Mexican people.

Read more…

Mexico’s Economy Remains Weak in First Quarter

Wall Street Journal, 5/23/14peso by Guanatos Gwyn

MEXICO CITY—Mexico’s economy remained weak in the first quarter as the economic slowdown in the U.S. weighed on the country’s vital export engine and the impact of new taxes hit domestic demand.

Gross domestic product expanded 0.28% in the January-to-March period, seasonally adjusted from the previous quarter, the national statistics agency said Friday, below expectations of 0.4%. The increase translates into an annualized seasonally adjusted rate of 1.1%.

The economy expanded 1.8% from the first quarter of 2013, helped by the shift in the Easter holiday this year to April. Adjusting for the calendar effect, growth was 0.6% from a year earlier.

Read more…

Reality check for Mexico

arrows - different direction - choiceFinancial Times, 5/22/14

So Mexico, Aztec tiger, implementing far-sighted structural reforms that will ramp up economic growth, right?

Well yes, but prepare to be patient. The central bank, Banxico, has just delivered a reality check: growth this year will be in the 2.3 to 3.3 per cent range, not the 3 to 4 per cent previously forecast.

Last year, just as sentiment about Mexico was surging with a can-do new president preparing to boldly reform where no president had reformed before, the economy went into an unexpected tailspin – a combination of a new government not unleashing spending, and impact from the US.

Read more…

Mexican Central Bank Sees Incipient Economic Recovery

finance-market_dataThe Wall Street Journal, 5/9/14

Mexico’s central bank said Friday an incipient economic recovery is under way, citing an improvement in exports and government spending, although many economists remain skeptical whether Latin America’s second-largest economy is clearly picking up after more than a year of anemic economic growth.

Most of the five-member board agreed that the economy started to improve at the end of the first quarter and that the recovery will continue in the coming months, the minutes of its most recent policy meeting showed.

The central bank’s comments come as most economists, and independent bodies such as the Organization for Economic Cooperation and Development, have been lowering their growth forecasts for Mexico for this year. Some economists have been arguing that the Mexican economy has been in a recessive period over the last nine months, something the government denies.

Finance Minister Luis Videgaray has repeatedly said Mexico is growing and generating employment, although at a still unsatisfactory rate. The government, led by President Enrique Peña Nieto, is badly in need of results on the economic front: In its first year in office last year, the economy expanded 1.1%, much lower than the 3.5% growth initially expected. In the first two months of 2014, growth amounted to 1.4%.

The central bank appeared Friday to support the government’s view that the economy is picking up. It said auto industry exports, a main factor of the country’s export engine, rose in February. Most board members argued that private consumption likely improved gradually in the first quarter. Government spending is also seen gaining pace after last year’s delays.

Read more…

NAFTA: Necessary to Cement Mexico’s Economic Reforms but Not Sufficient for Growth

NAFTAAmerica’s Trade Policy and the Woodrow Wilson Center, 03/18/14

Mexico has been an independent nation for over 200 years now and we Mexicans have seen everything: periods of light and periods of darkness, eras of growth and stages of crises, times of peace and times of violence, moments of optimism and ill-fated intervals. There have also been innumerable grandiose plans, the majority of which end up supplying nearly always the poorest of results. Mistrust in the government is not recent nor is it the product of chance.