As 2015 draws to a close, Mexico and the UK can look back on 12 months of enriching exchanges as part of their Dual Year, originally conceived as a cultural initiative but subsequently expanded far beyond to areas including trade, investment, tourism, education, science and innovation.
Throughout the “Year of Mexico in the United Kingdom” and the “Year of the United Kingdom in Mexico” both countries have combined efforts and seized an historic opportunity to consolidate economic progress. Two main goals have been achieved: the doubling of bilateral trade to $7bn, and achieving the figure of half a million Britons travelling to Mexico yearly, a number that, taking into account the importance of tourism for the Mexican economy, has resulted in a windfall of $17.5bn. Read more
By Eric Farnsworth, Council of the Americas
July was bad for Mexico, the month ending with news of a gangland-style murder of journalist Ruben Espinosa and four others in Mexico City. It was the latest in a lengthening line of journalists targeted and killed for their profession — 370 over the past 10 years, according to the Committee to Protect Journalists.
Coupled with the spectacularly embarrassing escape of drug lord Joaquín “El Chapo” Guzmán from his maximum security prison cell, as well as perceptions of corruption and self-absorption that continue to swirl around the ruling class, the political mood has turned sour. Headlines proclaiming that the 2012 election of President Enrique Peña Nieto would usher in “Mexico’s moment” seem long ago and far away. Read more
What’s the one good thing about Mexico’s consumer confidence being poor? It should help prevent the country’s weakening peso from fuelling inflation.
All eyes are on the peso at the moment, after monetary authorities launched a new intervention programme on Wednesday to try to calm volatility and ensure liquidity as the dollar goes from strength to strength. Read more
By Eduardo Bolio and Jaana Remes, McKinsey
Since the 1980s, both national and international observers have predicted time and again that economic growth in Mexico is just about to take off. But it hasn’t, and others have quickly gained ground and overtaken Mexico. In 1980, for instance, Mexico’s GDP per capita was almost double South Korea’s and 30 per cent higher than Taiwan’s. Today, South Korean per capita GDP is twice Mexico’s and Taiwan’s is almost three times as much. China, which had one-twelfth of Mexico’s GDP per capita in 1980 could surpass Mexico by 2018.
The important factors that stoke rapid growth in emerging economies exist in Mexico: a young and growing labor force, abundant natural resources, and access to export markets (in Mexico’s case a strategic location next to the United States and membership in NAFTA provide uniquely privileged access). In addition, Mexico has opened up its economy to trade and foreign investment, installed extensive reforms. Since 2000, it has also been able to boast sustained macroeconomic and fiscal stability. Read more
Mexico’s oil liberalisation is now well under way, with the tender of a second lot of oil assets – nine fields grouped into five blocks – now set to join the 14 that have already been announced. But do the country’s projections for future oil recovery add up?
The government is hoping that private investment in a sector closed for nearly 80 years under the monopoly of state oil company Pemex will succeed in turning around a decade of inexorable decline in Mexico’s oil output. Indeed, it has talked of adding 500,000 barrels per day (bpd) by 2018, when the government’s term is up. Read more
A new year, a newly opening Mexican oil sector … but things are off to a mixed start.
On the less than rosy side, little more than a week into what is supposed to be a year heralding an unprecedented energy investment boom, Pemex, the state oil company, has taken the step of not renewing a host of contracts for oil service workers. Read more
By Grace Fan, Trusted Sources
One-third of the way through his six-year term, Mexican President Enrique Peña Nieto has dazzled investors with his ambitious reform record, the cornerstone of his administration’s broader development programme to revitalize the sluggish Mexican economy. But the telegenic 48-year-old leader with a reputation for results-oriented governing has failed to convince his increasingly sceptical domestic constituency that he can deliver the goods.
Tepid GDP growth, devastating security problems, political mis-steps and escalating corruption allegations at the end of the year have embroiled him in the worst political crisis in the two-year history of his administration. Read more
Mexico’s government has bowed to the inevitable and cut its 2014 GDP growth forecast, to between 2.1 and 2.6 per cent this year, despite hailing a pick-up in activity in the third quarter that it said should continue throughout the rest of the year.
No big surprise there – growth has been disappointing all year so the writing has long been on the wall. And indeed owing to a change in methodology (more on this shortly), the government is keeping its options open with a new range-based forecast. For 2015, its estimate is 3.2 to 4.2 per cent. The growth goal for 2015 in the budget was 3.7 per cent.
But is there a silver lining to all these cuts? Read more
For Mexico, which does not produce all the natural gas it needs, the benefits of importing from the US are clear – it’s cheaper, it’s cleaner and it’s going to bring lower tariffs for manufacturers more quickly than continuing to rely on costly fuel oil.
But what about the other side of the bargain? What’s in it for the US? Read more
For months, the word “oil” in Mexico has gone hand-in-hand with “reform”, with the government giddily looking ahead to a rosy future filled with billions of dollars pouring into the sector.
Then oil prices tanked and people started whispering that maybe Mexico’s energy reform was not looking so attractive after all, and maybe Mexico’s fragile economic recovery might be given another knock. Read more
It’s not just about oil. That is, in a nutshell, Mexico’s message to investors. What about halal food? Or ships? Videogames, anyone?
Oil and gas prospects are obviously at the front of Mexico’s investment prospects – the country’s energy reform is expected to attract as much as $50bn in foreign investment in 2020.
But there’s more, the government says. And not just in the increasingly high-tech manufacturing industry that Mexico has embraced – it is the world’s fourth exporter of cars and first of flat-screen TVs, and its aerospace industry has rocketed. Read more
Mexico’s energy reform is all about boosting investment and thus production. But the million dollar question is: just how much investment will flood in, and to what type of resource, when fields are put on the block starting from next year?
Ernesto Marcos, a former CFO of Pemex, the Mexican state company, has hazarded what looks like the first comprehensive guess. Read more
Mexico’s 2015 budget may contain a slightly lower growth forecast than originally anticipated, but compared to other heavyweights in Latin America, things are still looking good.
In the 2015 budget presented to Congress, Mexico’s government pencilled in a GDP growth goal for next year of 3.7 per cent. As recently as April, the government had been sticking to a 4.7 per cent forecast. Even though a full point lower than that earlier forecast, it’s still ahead of this year’s goal of 2.7 per cent, which the government has ratified. Read more
Carlos Slim’s telecoms empire may be being chopped down to size in Mexico but his influence in his home country looks anything but on the wane – indeed, it could be set for a brand new take-off in the shape of the Mexico City airport.
It’s all speculation so far but not only is Carso, one of the groups in Slim’s empire, reported to be interested in bidding for the expected $9bn project, but his son-in-law Fernando Romero, in partnership with Britain’s Norman Foster, is believed to have won a contract to design what will be President Enrique Peña Nieto’s crown jewel infrastructure project. Read more
Free-trade champion Mexico is on a reform drive that promises new openness in key sectors of its economy, especially energy. So what is it doing slapping protectionist measures on its shoe industry?
Fighting unfair competition from China, officials say.
The raft of new measures to protect Mexico’s industry – which makes 240m pairs of shoes a year – sounds distinctly off message, especially since President Enrique Peña Nieto has made boosting trade ties with China a priority. (He met his Chinese counterpart three times within six months to forge closer relations.) Read more
Mexico has a brand new police force, the gendarmería tasked with beefing up the country’s crackdown on crime.
But according to the Inter-American Development Bank (IDB), it may have a powerful crime-fighting weapon already: remittances. Read more
More glum news for Mexico’s economy, which has been growing at turtle speed this year. Growth in May came in below expectations – again.
According to the state statistics office, growth in May was a disappointing 1.4 per cent, below market forecasts for nearer 2 per cent. Read more
Investment in Mexico: it’s the real thing. Coca-Cola’s announcement that it will pour $1bn into the country every year until 2020 is just the latest in a string of recent big-ticket spends in a country where manufacturing is leading the country out of an untimely economic slump.
The US beverage maker, whose operations in Mexico include eight bottling groups in Mexico, juices and dairy as well as sodas and water, said it would invest more than $8.4bn from 2014-2020, bringing the total invested in Mexico during the decade to $12.4bn. Read more
In the run-up to his election victory in 2012, Enrique Peña Nieto pledged to create a new 40,000-strong paramilitary gendarmerie for Mexico to help combat security problems stemming from the country’s war on drugs.
Plans for the force were whittled back to 10,000, and seemed to be eternally delayed. But next month Mexico’s new police force is finally ready for launch, albeit with a more slimmed-down starting line-up of 5,000 new officers. Read more