Economy
From The Report: Mexico 2017
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From being relatively closed and heavily dependent on oil exports to drive growth and accrue foreign currency, Mexico has progressively liberalised and integrated into regional and global value chains. Although economic openness left Mexico more exposed to the global financial crisis than some of its Latin American peers, its economic profile has since allowed it to bounce back as global trade and investment flows recover. Uncertainty is likely to constrain investment in 2017, at least until there is clarity as to the impact of changes in US trade and investment policy. Once the short-term turbulence has been negotiated, a modest acceleration in growth is likely, while continued fiscal and monetary policy vigilance should see debt sustainability assured and inflation pressures contained. This chapter includes interviews with Ildefonso Guajardo Villarreal, Minister of Economy; Paulo Carreño King, Director-General, ProMéxico; and Valentín Díez Morodo, President, Mexican Business Council for Foreign Trade.

Articles from this Chapter

Overview

Standing strong: A commitment to stable growth has allowed for expansion in the face of serious challenges
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Since the mid-1990s, Mexico has undergone a remarkable structural transformation. From being relatively closed and heavily dependent on oil exports to drive growth and accrue foreign currency, the country has progressively liberalised and integrated into regional and global value chains. At the same time, oil production has been in long-term decline, while the fiscal reforms first unveiled in 2013 have served to further reduce the dependence of the public coffers on income from the energy sector.…

Analysis

Target practice: The central bank is working to keep inflation in check
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Having been plagued by chronic high inflation and periodic crisis until the mid-1990s, Mexico turned to economic liberalisation in the wake of the 1994-95 “Tequila crisis”. Among the important reforms was the granting of independence to the central bank, Banco de México (Banxico), in the operation of monetary policy, along with a clear mandate to control inflation above all other policy considerations. To this end, Banxico adopted an inflation target of 3% in 2003, with a margin for manoeuvre…

Interview

On all fronts: Ildefonso Guajardo Villarreal, Minister of Economy, on regulatory reform and promoting free trade
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Interview:Ildefonso Guajardo Villarreal How is Mexico addressing economic inequality? IIDEFONSO GUAJARDO VILLARREAL: Naturally there is a correlation between low productivity, low growth and inequality. For instance, in Mexico, companies established in the northern region are up to six times more productive than the ones located in the south, where economic and social indicators are far behind those of the north. To reduce that gap, President Enrique Peña Nieto has introduced 13 structural…

Interview

Holding firm: Paulo Carreño King, Director-General, ProMéxico, on bolstering investment and trade relationships
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Interview:Paulo Carreño King How will the ongoing rollout of structural reforms incentivise foreign direct investment (FDI)? PAULO CARREÑO KING: President Enrique Peña Nieto’s 13 structural reforms were implemented precisely to transform Mexico’s economy through increasing its productivity and competitiveness. More specifically, many of these reforms have allowed for the opening of new markets through private sector investment, making Mexico a more attractive destination for both domestic…

Analysis

Branching out: The government is looking to diversify its trading partners
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Given that Mexico shares a long land border with the largest economy in the world, and that, particularly since the North American Free Trade Agreement (NAFTA) came into force in 1994, barriers to trade and investment between the two countries are minimal, it is natural that the US would be Mexico’s most important economic partner. These linkages are particularly striking in the sphere of exports, with the US accounting for more than 80% of goods and services produced for export in Mexico. The…

Analysis

In high gear: Focus on increasing investment flows to a wider variety of regions
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Given Mexico’s location on the doorstep of the world’s largest economy, its low unit labour costs, and its openness to trade and investment, the country has become a manufacturing hub serving the US and other markets. Since the North American Free Trade Agreement (NAFTA) was implemented in 1994, the country has become deeply integrated into North American supply chains, becoming a leading exporter of both components and finished products in the auto, aeronautics and electronics segments. This…

Interview

Outward bound: Valentín Díez Morodo, President, Mexican Business Council for Foreign Trade, Investment & Technology, on Mexico’s diversification opportunities
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Interview: Valentín Díez Morodo How have Mexico’s structural reforms aided the internationalisation of local companies? VALENTIN DÍEZ MORODO: For a long time Mexico was uncompetitive in its development of international trade. Implementing deep structural reforms allowed the country to establish a solid framework, giving Mexican companies the opportunity to develop their activities at a reduced cost. With the support of realistic public policies, those reforms could increase Mexico’s competitiveness.…