Mexico: the engine that just keeps on chugging

Mexico’s President Enrique Peña Nieto and his economic team must be chuffed. Barclays is the latest to sing the praises for the country’s resurgent economy.

The bank’s most recent analysis believes that the prospect for political reform – seen as a key by many commentators – as well as the improvement of competitiveness in manufacturing will maintain a healthy degree of dynamism this year.

Fiscal adjustments that have to be made in the United States will be negative for Mexico but, with that proviso, the Mexican economy can survive most of the obstacles, the British bank adds.

The most recent Mexican figures for economic growth in 2012 show that it is likely to have closed last year at 4 per cent, Barclays says, up from its previous forecast of 3.8 per cent.

But the figures from Mexico’s many international trade treaties have been the big surprise for the Barclays analysts. The trade surplus in December came to not far shy of $1bn.

Forecasts of crude production, which lagged once again last year, and creation of jobs in the formal sector, are the inputs that are needed to complete the Barclays forecasts for private-sector indices and economic activity, the bank cautioned. “The private sector has to rise by 0.2 per cent due to the 11.3 per cent in production of automobiles,” it said.

But the 0.8 per cent increase in US manufacturing is enough to ensure the growth of industrial output in Mexico, it says. And demand for peso assets is likely to bolster the Mexican currency, thanks to expectations of growth in the nation’s economy.

Over to you, Enrique!

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