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The Mexican Economy. Jorge G. Gonzalez Trinity University. Recent Economic and Political Events. U.S. slow growth and financial upheaval Domestic sources of growth Calderón’s victories in Congress Pension Reform Fiscal Reform Oil reform and AMLO Mexico – U.S. relationship. - PowerPoint PPT Presentation

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Jorge G. Gonzalez

Trinity University

The Mexican The Mexican EconomyEconomy

Recent Economic and Recent Economic and Political EventsPolitical Events

►U.S. slow growth and financial upheavalU.S. slow growth and financial upheaval►Domestic sources of growthDomestic sources of growth►Calderón’s victories in CongressCalderón’s victories in Congress

Pension ReformPension Reform Fiscal ReformFiscal Reform

►Oil reform and AMLOOil reform and AMLO►Mexico – U.S. relationshipMexico – U.S. relationship

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle

50

60

70

80

90

100

110

120

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

U.S. Mexico

Industrial Production Industrial Production IndexIndex

(January 2000 = 100)(January 2000 = 100)

Source: Banco de México and FED www.banxico.org.mx; www.federalreserve.gov

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle►GDP growthGDP growth

Real GDPReal GDP% yearly change% yearly change

Source: INEGI www.inegi.gob.mx

-10

-5

0

5

10

1994 1996 1998 2000 2002 2004 2006

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle►GDP growthGDP growth►Foreign direct investmentForeign direct investment

Foreign Direct Foreign Direct InvestmentInvestmentBillions of DollarsBillions of Dollars

Source: Banco de México www.banxico.org.mx

2.64.84.4 4.4

11.09.5 9.2

12.812.713.7

18.0

29.5

23.0

16.6

22.920.8

19.2

23.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1990 1993 1996 1999 2002 2005

DEM +

NAFTA

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle►GDP growthGDP growth►Foreign direct investmentForeign direct investment►Super Peso and foreign sectorSuper Peso and foreign sector

Exchange RateExchange RatePesos per U.S. DollarPesos per U.S. Dollar

Source: Banco de México www.banxico.org.mx

456789

101112

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Exchange RateExchange RatePesos per U.S. DollarPesos per U.S. Dollar

Source: Banco de México www.banxico.org.mx

456789

101112

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

1995 1997 1999 2001 2003 2005 2007

Inflation Differential vs. Inflation Differential vs. Exchange RateExchange Rate

Inflation

Exchange Rate

321

225

Source: Banco de México www.banxico.org.mx

10

20

30

40

50

60

70

80

90

94 - I 95 - I 96 - I 97 - I 98 - I 99 - I 00 - I 01 - I 02 - I 03 - I 04 - I 05 - I 06 - I 07 - I

Merchandise TradeMerchandise TradeBillions of DollarsBillions of Dollars

Source: Banco de México www.banxico.org.mx

Imports

Exports

0

10

20

30

40

2003 2004 2005 2006 2007

Perc

ent

Merchandise ExportsMerchandise ExportsAnnual Growth RateAnnual Growth Rate

Source: Banco de México www.banxico.org.mx

Europe

U.S.

0

10

20

30

40

2003 2004 2005 2006 2007

Perc

ent

Merchandise ImportsMerchandise ImportsAnnual Growth RateAnnual Growth Rate

Source: Banco de México www.banxico.org.mx

Europe

U.S.

Family RemittancesFamily RemittancesBillions of DollarsBillions of Dollars

4.2 4.9 5.6 5.9 6.68.9 9.8

13.716.7

20.3

23.724.0

0.0

5.0

10.0

15.0

20.0

25.0

1996 1998 2000 2002 2004 2006

Source: Banco de México www.banxico.org.mx

Family RemittancesFamily RemittancesBillions of DollarsBillions of Dollars

4.2 4.9 5.6 5.9 6.68.9 9.8

13.716.7

20.3

23.724.0

0.0

5.0

10.0

15.0

20.0

25.0

1996 1998 2000 2002 2004 2006

Source: Banco de México www.banxico.org.mx

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle►GDP growthGDP growth►Foreign direct investmentForeign direct investment►Super Peso and foreign sectorSuper Peso and foreign sector►Disciplined fiscal policyDisciplined fiscal policy

0.2 0.0 0.0

-0.7

-1.1-1.0 -1.0

-0.7

-1.1

-0.6

-0.2 -0.1

0.1 0.0

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1994 1996 1998 2000 2002 2004 2006

Government BalanceGovernment BalanceBalance / GDPBalance / GDP

Source: SHCP www.shcp.gob.mx

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle►GDP growthGDP growth►Foreign direct investmentForeign direct investment►Super Peso and foreign sectorSuper Peso and foreign sector►Disciplined fiscal policyDisciplined fiscal policy►Price stabilityPrice stability

InflationInflation

Source: Banco de México www.banxico.org.mx

7.05

51.97

27.70

15.7218.61

12.328.96

4.40 5.703.98 5.19

3.33 4.05 3.76

0

10

20

30

40

50

60

1994 1996 1998 2000 2002 2004 2006

The Mexican EconomyThe Mexican Economy

►North American business cycleNorth American business cycle►GDP growthGDP growth►Foreign direct investmentForeign direct investment►Super Peso and foreign sectorSuper Peso and foreign sector►Disciplined fiscal policyDisciplined fiscal policy►Price stabilityPrice stability

►War on povertyWar on poverty►Rule of lawRule of law►Energy sector and labor lawsEnergy sector and labor laws►Domestic antitrust and competitionDomestic antitrust and competition►Mexico – U.S. relationshipMexico – U.S. relationship

Agenda for President Agenda for President Calderón Calderón

The Mexican The Mexican EconomyEconomy

www.trinity.edu/jgonzal1

jorge.gonzalez@trinity.edu

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