|
ECONOMIC BRIEFINGS
Information provided by the Mexico Trade Commission-ProMexico’s
New York Office.
IMPACT FROM THE U.S. SLOWDOWN
Mexico has faced the impact from the U.S. slowdown
in three main macroeconomic fronts:
-
According to the Ministry of Economy, the
Foreign Direct Investment received from January
to June of this year has reached 10.5 billion
dollars, down 20.4% from last year. New
investments have taken the biggest hit declining
from 5.7 billion dollars to 2.1 billion dollars
during the same period of time.
-
Remittances from Mexican workers in the U.S. to
Mexico have been declining increasingly and
continuously from June of this year up to date.
It is expected that by the end of the year they
will decrease by another 2-5%. One of the main
reasons behind this decline is the huge
contraction in the U.S construction industry.
-
The
price of oil is down notoriously. The Mexican
oil mix is down from almost 130 dollars per
barrel to less than 70 dollars per barrel. That
means about a 50% decline from its peak in July
of 2008. This is going to take a toll not only
on the amount of foreign dollars entering into
the country but also on the fiscal accounts,
since a significant part is being used to pay
for government expenditures.
MACROECONOMIC SITUATION
Despite the impact Mexico has experienced, it is
very important to acknowledge as well that Mexico at
this point in time is in a more solid position to
confront this global crisis due to many factors
which are worth mentioning: fiscal balance, lower
levels of foreign debt, independent central bank and
inflation under control, large pool of domestic
investments ready to be used to finance the needs of
the governments and the private sector, stronger and
healthier financial system and a flexible exchange
rate etc.
MEXICO’S ECONOMIC OUTLOOK
The government has revised its estimates of GDP
growth from 2.4% to 2.0% in 2008 and from 3.0% to
1.8% in 2009. The Mexican oil mix price was revised
from 80.3 to 75.0 dollars per barrel for 2009. The
average exchange rate forecasted for 2008 and 2009
is 10.6 and 11.2 pesos per dollar, compared to
previous estimations of 10.4 and 10.6 pesos per
dollar, respectively.
MEXICAN GOVERNMENT’S PROGRAM FOR GROWTH AND
EMPLOYMENT.
As a result of this economic outlook, the government
is putting in place a program of structural and
cyclical measures to allow the Mexican economy to
successfully face and deal with this global
environment. It is important to mention that this
program has to be approved by the Mexican Congress
This program includes additional expenditures in
infrastructure of ps. 65.1 billion and will also
increase its financing through development banks
supporting Mexican firms – in particular small and
medium sized firms –, for the primary sector, for
infrastructure, and for housing. This will account
for a total of ps. 130 billion during 2009.
Also, the government intends to eliminate Pemex’s
Pidiregas regime, along with other measures, which
will give greater transparency to the investment of
Pemex. The Pidiregas liability along with the
elimination of Pemex investments from the government
balance budget target will liberate resources up to
ps. 90 billion that will be used for a new refinery
and infrastructure investment and social programs.
All in all, considering the macroeconomic stability
and the implementation of this program, we expect
that Mexico will be in a strong position to deal
with this difficult environment by protecting jobs
and creating new ones with public investment.
|
