Economy
From The Report: Mexico 2015
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With a GDP of $1.26trn, Mexico is the second-largest economy in Latin America after Brazil and one of the most liberalised in the region. Though economic growth has been slow, ranging from 2% to 3% during much of the past decade, a series of reforms introduced by the government of Enrique Peña Nieto are expected to accelerate the pace of economic development in the medium term. While initial investor and market excitement over the structural reforms has been tempered by low oil prices and a degree of nervousness over the potential effects of monetary tightening in the US, Mexico is set for growth in 2015, with the economy expected to expand by 3%, according to the IMF, following estimated GDP growth of 2.1% in 2014.

This chapter includes interviews with Ildefonso Guajardo Villarreal (IGV), Minister of Economy; Luis Videgaray Caso, Minister of Finance and Public Credit; Francisco N González Díaz, Director-General, ProMéxico; and Juan Pardinas, Director General, Mexican Institute for Competitiveness.

Articles from this Chapter

Overview

Implementing reforms: One of the world’s largest economies is getting a makeover
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Depending on the measurement used, Mexico is either the 13th- or 14th-largest economy in the world, and it also among the most liberalised economies in Latin America. Over the 2000-10 period, the country has seen a rapid expansion of the middle class, with 17% of the population, or 20m people, achieving this status. By size of population and GDP – 122.3m and $1.26trn, respectively – Mexico is the second-largest economy in the region after Brazil. Unlike Brazil, however, where governments have…

Interview

Reforming for growth: OBG talks to Ildefonso Guajardo Villarreal (IGV), Minister of Economy
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Interview:Ildefonso Guajardo Villarreal How will reforms help alleviate unemployment? ILDEFONSO GUAJARDO VILLARREAL: Mexico must create 1m jobs annually to match the number of young people entering the labour market. To reach that goal, the government has approved reforms aimed at tackling the factors that have inhibited growth: rigid labour rules, highly concentrated markets, low access to credit, expensive telecoms, inefficient public spending and high energy costs. The structural reforms…

Interview

Streamlining procedures: OBG talks to Luis Videgaray Caso, Minister of Finance and Public Credit
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Interview: Luis Videgaray Caso How many extra taxpayers did the reforms bring in? LUIS VIDEGARAY CASO: The number of registered taxpayers showed an average annual growth of 7.6% for the 2011-13 period, while for 2014 it was 11.1%. This increase is due to two major changes regarding the registry of new taxpayers. First, the creation of a new simplified regime for small-scale taxpayers will provide a gradual transition into the general tax regime. Second, the Tax Administration Authority introduced…

Analysis

Wealth reserves: The nation’s sovereign wealth fund gets a slow start
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On January 1, 2015 the new Mexican Oil Fund for Stabilisation and Development (Fondo Mexicano de Petróleo para la Estabilización y el Desarrollo, FMP) began operations. The FMP was created as part of the package of energy sector reforms and constitutional changes approved by Congress during the course of 2013 and 2014. Technically, it is intended as a sovereign wealth fund, destined to receive, manage and distribute income (excluding taxes) from upstream oil and gas activities. Importantly, apart…

Interview

Investment perks: OBG talks to Francisco N González Díaz, Director-General, ProMéxico
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Interview:Francisco N González Díaz What is the importance of the Pacific Alliance in terms of foreign direct investment (FDI) to the Latin American region? FRANCISCO N GONZÁLEZ DIAZ: The four countries that belong to the Pacific Alliance together comprise the world’s ninth-largest economy and account for 47% of FDI flows into Latin America, receiving more investment than Mercosur member states. According to the World Economic Forum, the Pacific Alliance members have efficient mechanisms…

Interview

Essential reforms: OBG talks to Juan Pardinas, Director-General, Mexican Institute for Competitiveness
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Interview:Juan Pardinas What can be done to improve Mexico’s global ranking in terms of the ease of doing business? JUAN PARDINAS: The cost of electricity and the procedures related with registering property are two of the main obstacles affecting the country’s competitiveness. The government is hoping that the energy reform will lead to cheaper electricity and a more competitive market. If the energy reform is to be successful in reducing prices, the country needs to overcome at least…

Analysis

Starting small: Entrepreneurship is common, but greater support would spur growth
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There is growing interest across Mexico in innovation and entrepreneurship, and in how they can contribute to raising the country’s levels of productivity, employment and economic growth. However, a review of what is happening in the country in this important space must be undertaken in two parts. The first involves the acknowledgment that as a developing economy Mexico faces serious structural problems, some of which pose real obstacles and significant challenges to the kind of innovation and…

Analysis

Measuring up: Fiscal austerity planned for 2015 and 2016
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The sharp decline in international oil prices has forced the government to cut its fiscal spending plans for 2015 and 2016. In part this is because the administration has already committed itself to introducing no further tax increases in 2015, following the hikes that took place at the beginning of 2014 as part of the structural reform programme. The deficit can therefore only be reduced by an adjustment on the spending side. The finance minister, Luis Videgaray, is seeking to do this and to maintain…

Analysis

Project capital: Infrastructure will benefit from the Fibra E investment vehicle
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As announced during President Enrique Peña Nieto’s state-of-the-union speech in September 2015, Mexico is launching a new energy and infrastructure investment vehicle known as the Fibra E. The new instrument aims to meet one of the country’s current financing challenges. Despite being ready to move on a wide range of major, long-term and profitable infrastructure projects, Mexico faces a short-term squeeze on public sector capital expenditure due to fiscal austerity triggered in part by low…