An IMF research paper shows how rare Latin American financial crises have been since 1998, when the world was rocked by EM currency crises. We’ve graphed the findings below.
Carlos Vegh and Guillermo Vuletin, the authors, think the continent has learnt from 1998. Successful countries like Brazil, Peru and Chile have stimulated their economies when GDP dipped; before 1998, they were less keen to do so. Continue reading »
Heineken, which bills itself as “the world’s most international brewer”, is stepping up its drive into the premium beer market in Mexico. It’s going to be tough, for two reasons.
First, beer is ubiquitous in Mexico – and very, very cheap (a bottle of beer is not far off the price of a bottle of water). So persuading consumers to switch from their cheap lager of choice to a premium brand, at higher cost, sounds like a tough sell. (To put that into perspective – premium brand beers only account less than 5 per cent of Mexico’s $7.5bn beer market, Heineken says.)
The second hurdle is competition: Heineken, which bought Mexico’s No. 2 brewer Femsa Cerveza in 2010 (and has a stable that also includes Tecate, Dos Equis, Sol, Bohemia and Indio), is up against the larger Modelo brewery (maker of Corona and Estrella beer), which was taken over this year by Belgium’s AB InBev and has 58 per cent of the market to Heineken’s 41 per cent.
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The surprising thing about Brazilian banking giant Itaú’s decision to open up investment banking operations in Mexico is, perhaps, that it hasn’t done so already.
Mexico is, after all, the region’s second-largest economy, and it is having an electric year on financial markets as well as being in the throes of some serious structural reforms designed to pull in billions of dollars in investment, especially in the energy sector.
Itaú BBA, the bank’s corporate investment banking arm, expects to open up shop in January under the stewardship of Alberto Mulas, an investment banking specialist with experience in the corporate world and in government. Continue reading »
Education was one of the reforms pushed through by Enrique Peña Nieto, Mexico’s president, this year. Good job too, if the latest OECD statistics are anything to go by.
The OECD’s Programme for International Student Assessment, or PISA, scores – which measure performance in literacy, maths and science every three years – make for depressing reading. Particularly if you compare performance with China – Mexico’s great manufacturing competitor. Continue reading »
With very little to brag about so far in economic terms, the one-year-old government of Enrique Peña Nieto, president of Mexico, is betting on a banner year in 2014.
Having learnt a tough lesson on the crucial role that government spending, particularly on infrastructure projects, plays in Mexico’s economic performance, the government is not just trying to avoid this year’s budget delays — it is already moving on with assigning projects that are scheduled to start in 2014.
At least it is doing so with Tuesday’s planned announcement of 15bn pesos (US$1.15bn) worth of public work projects it plans to assign through public bidding processes.
As a result, the authorities are hoping that by announcing these new projects as early as Tuesday, they’ll be ready to allocate them in the first weeks of January so that the winners can start their construction by late next month or early February.
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A bold young president with a technocratic team promises a new world of prosperity for Mexico, and many believe him. But then comes a crushing devaluation that brings much of his country to its knees. Such were the inauspicious events that surrounded Nafta’s beginnings 20 years ago. Today, Nafta continues to shape the Mexican economy. Indeed, in some ways, it is the country’s most enduring institutional arrangement. For one, it has turned the country into a manufacturing powerhouse that exports more manufactured goods than the rest of Latin America combined. Nafta’s 20th anniversary, and its next 20 years, are explored in an FT special report from the Mexican, US and Canadian perspectives. Continue reading »
The hotly contested Honduran election still hasn’t yielded a final official result. But maybe it’s not too soon to spot some lessons Mexico might offer the Central American state.
They boil down to: “Amlo” vs “Pacto”. Continue reading »
As soon as Ben Bernanke mentioned in late may that the Federal Reserve could soon begin to scale back its bond-buying programmed, hell broke loose in emerging markets.
Stock prices declined, currencies fell and interest rates on sovereign or corporate bonds shot up. For many investors, Bernanke’s comments on May 22 in testimony before the US Congress meant that the easy flows of money that had landed in emerging economies would not only end soon, but worse — would be reversed.
As a result, many financial markets in emerging economies began experiencing some “withdrawal symptoms” even before the Fed had acted.
Press forward. By September, the Fed hadn’t touched its bond-buying programme and suggested instead that it wouldn’t any time soon. Most economists and fund managers by then had figured that the famous tapering would not take place until at least December.
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Mexico may be all the rage among investors. But praise the country in polite Mexican society and you risk running a gauntlet of abuse. John Authers, the FT’s investment columnist and a former Mexico bureau chief, describes the situation very well.
Certainly, President Pena Nieto’s reform agenda gets high marks for concept but low marks for delivery. Of his four biggest initiatives, the detail of telecom reform is still being worked out; ditto education; the fiscal reform was disappointing; and we don’t yet know the full shape of the energy reform. No wonder the understandable scepticism, then, of much local conversation – even if the intensity of that conversation has meant missing another problem that has not won the discussion it deserves. Continue reading »
After a disappointing year, the Mexican economy seems to have turned the corner.
At least that’s what the third-quarter GDP numbers show. For starters, its annual growth rate of 1.3 per cent exceeded expectations of a 1 percent growth rate, and its quarter-to-quarter seasonally adjusted number came in positive (o.8 percent), ending all speculations that Mexico would fall into recession.
The economy actually contracted 0.6 percent in the second quarter, an unexpected event for a country that was expected to continue its growth momentum of the past three years.
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How ironic. Just after Mexico’s annual three-day bargain weekend known as the “buen fin” racked up sales of 160bn pesos ($12m) , retail sales data for September was published – and they were terrible.
The 4 per cent drop in retail sales in September (and a 0.4 per cent month-on-month fall) comes just as the economy was showing tentative green shoots after a year in which growth is now expected to struggle to top 1 per cent – less than a third of the government’s heady early predictions.
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He’s Mexican and rich. He owns important stakes in telecoms and media operations. But his name is not Carlos Slim.
David Martínez is a studiously low-profile financier who is now spending $960m to add control of Telecom Argentina to his stable of investments, which includes a 40 per cent stake in Cablevision, the cable TV unit owned by Argentine media empire Clarín. Why? Let’s face it, many other business folk tend to give Argentina a wide berth. Continue reading »
Capital Economics reckons the worst of Mexico’s annus horribilis is behind it. Share the optimism?
Let’s see: in terms of economic data this week, industrial production fell by 1.6 per cent (way higher than the 0.4 per cent market consensus) in September. That was dragged down by construction, which crashed 8.3 per cent, its 13th successive monthly fall, but manufacturing was anaemic too. Continue reading »
Latin America is home to four of the five most violent countries in the world.
For an area of the world significantly richer per head than Africa and something of a hot spot for investors, this is damning.
The high crime rates are not just limited to drug-ridden basket cases like Honduras and Guatemala, either. In Brazil and Chile, crime is hitting growth, deterring business and swelling government coffers, according to a UN report released on Tuesday. Continue reading »