Economy
From The Report: Mexico 2014
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Despite being deeply affected by the global financial crisis of 2008-09, Mexico’s economy had been recovering since 2010, growing 5.1% and around 4% in 2011 and 2012, respectively. A steady recovery was interrupted in 2013 by growth of just 1.1% as a result of weak exports and a contraction in the construction industry. Overall export growth slowed from 6.1% in 2012 to 2.6% in 2013, shaving about three-quarters of a percentage point from GDP growth. A fall in oil prices dragged down the value of oil, one of Mexico’s most important goods, contributing to a 6.2% decrease in oil exports in 2013. While informality, inadequate government revenues and deficient domestic supply chains continue to plague the economy, the current government’s series of ambitious reforms, specifically for energy, telecoms and education, seem set to improve the economy’s competitiveness. This chapter includes interviews with Ildefonso Guajardo Villarreal, Minister of Economy; Francisco González Díaz, General Manager, ProMéxico; José Ángel Gurría, Secretary-General, Organisation for Economic Cooperation and Development (OECD); and Enrique García Rodríguez, Executive President, CAF development bank of Latin America.

Articles from this Chapter

Overview

Steering the best course: With several competitive advantages, the government is working to tackle challenges to growth
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Mexico is the second-largest economy in Latin America, a manufacturing giant that gets more competitive every year, a country with substantial natural resources and one of the most open economies in the world. It also suffers from a host of economic problems that contributed to growth nearly grinding to a halt in 2013, such as informal employment, inadequate government revenues and deficient domestic supply chains. The current government of President Enrique Peña Nieto of the centre-left Institutional Revolutionary Party has set about to address some of these issues and improve Mexico’s competitiveness through a series of ambitious reforms.…

Interview

OBG talks to Ildefonso Guajardo Villarreal, Minister of Economy
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Interview:Ildefonso Guajardo Villarreal How can the economic integration of North America be reinforced to increase its competitiveness? LLDELFONSO GUAJARDO VILLARREAL: When the leaders of North America met in Mexico in February 2014, they reaffirmed their commitment to making North America the most competitive region in the world. Mexico, the US and Canada are working on an agenda to deepen the region’s integration and make the most of our complementary features. This agenda includes reducing…

Interview

OBG talks to Francisco González Díaz, General Manager, ProMéxico
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Interview:Francisco González Díaz How are the government’s structural reforms expected to impact the economy? FRANCISCO GONZÁLEZ DIAZ: The structural reforms approved in 2013 seek to increase productivity, acting as a lever for growth and attracting larger flows of foreign direct investment (FDI). The financial, telecommunications and energy reforms are key examples of what our strategy entails. Energy will be opened up to foreign investment through service contracts, production sharing,…

Analysis

Period of reform: Several new initiatives will shape the economy for the medium term
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Having faced several financial crises in recent decades, Mexico has pursued a relatively prudent fiscal policy since the mid-1990s in a largely successful effort to sustain confidence in the country’s financial markets. While the government’s relatively low debt – at only 38.3% of GDP – would suggest that there is significant scope for fiscal stimulus, compared to other countries, this has to be balanced against the country’s immediate capacity to generate revenue. At less than 20% of GDP, tax revenues make up the smallest proportion of the national economy of any other country in the Organisation for Economic Cooperation and Development…

Analysis

Challenging informality: Tax reform is expected to reduce the weight of the informal sector
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In line with reforms pertaining to energy, education and telecommunications, Mexico is also amending its tax system (see Tax chapter). In late 2013, President Enrique Peña Nieto signed the new reform into law, which was thereafter approved by Congress. The reform aims to reduce dependence on energy revenues and to boost tax collection through a series of measures, including higher taxes for the wealthy and additional levies on a variety of different products. However, a big part of making the taxation system more efficient will depend on the government’s ability to reach Mexico’s massive informal sector. To do this, authorities are easing…

Analysis

Globally integrated: Free trade agreements to help diversify Mexico’s export markets
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In the 20 years since the North American Free Trade Agreement (NAFTA) was implemented, successive Mexican governments have remained committed to opening borders and promoting trade. After Mexico, the US and Canada launched NAFTA in January 1994, Mexico entered into FTAs with more than two dozen countries, making it one of the most economically open countries in the world. In the 1990s, Mexico signed FTAs with other Latin American countries, including the G-3 with Colombia, Chile and Venezuela (though Caracas withdrew from the agreement in 2006). In 2000, FTAs were signed with the EU, Israel and the European Free Trade Association (which includes…