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Old 08-12-2011, 06:43 PM
 
155 posts, read 344,757 times
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Mexico's Rapid Recovery Attests to Strong Fundamentals

IMF

August 8, 2011
  • Mexico is expected to continue on a firm recovery, but global risks persist
  • Priority to gradually adjust policy stance balancing domestic, external conditions
  • Advancing structural reforms key to enhancing growth, employment creation
  • Need to address long-term fiscal challenges
Mexico’s strong growth is expected to continue this year and next, but risks linked to the global outlook persist, the IMF said in its annual health check of Latin America’s second largest economy.

The IMF report said that Mexico had rebounded strongly from the global crisis, which attested to the country’s strong fundamentals and skillful policy management.

According to the report, which was discussed by the IMF’s 24-member Executive Board on July 27, manufacturing exports have led the recovery, with a rebound in domestic demand sustaining the momentum. Strong growth is expected to continue this year and into 2012, at about 4½ percent and 4 percent respectively, bringing output in line with potential.
In addition, three successive Flexible Credit Line arrangements—an insurance option created in 2009 for the IMF’s strongest performing members—have supported Mexico’s macroeconomic policies by providing a significant buffer against potential global tail risks, the IMF report said.

Monitoring spillovers
About 80 percent of Mexican exports go to the U.S. market, and Mexico’s industrial production closely tracks that of the United States. This reflects the high degree of integration of Mexican manufacturing into the U.S. industrial production chain. Therefore, a more prolonged slowdown in the United States, particularly if it involved manufacturing, could be a drag on Mexico’s growth, said the IMF.

According to the IMF, the direct impact of renewed financial problems in Europe would likely be contained for Mexico; but any consequent surge in global risk aversion could adversely affect even strong performers, such as Mexico, given its close integration with international capital markets.

Gradual policy adjustment
With growth in Mexico expected to continue on a strong footing, a key challenge for the authorities is how to gradually adjust policies, balancing domestic conditions against potential global downside risks.

As fiscal consolidation is judiciously underway and past stimulus gradually withdrawn, the IMF said that the task of balancing domestic conditions and the potential impact of increased global downside risks would fall on monetary policy. With inflationary pressures at bay and inflation expectations firmly anchored, the central bank has room to decide on the best timing for the policy response to domestic and international developments.

The IMF noted that the authorities should continue gradually rebuilding fiscal buffers, which allowed Mexico to pursue a countercyclical policy response during the recent global crisis, to provide an additional insurance against potential global downside risks. Consideration could also be given to enhancing Mexico’s strong fiscal framework by focusing on a structural balance measure.

Revenue mobilization
Over the longer term, age-related (health and pension) spending pressures and declining oil revenues as a share of GDP will pose fiscal challenges requiring a combination of non-oil revenue mobilization efforts, including at the subnational level, and expenditure rationalization.
Reforms should be undertaken in the near future to prepare for these medium-term challenges.

Sound financial system
Mexico’s prudential framework is ahead of new international financial standards, with banks well positioned to implement them, the IMF report said.
The country has also been a leader in the setting up of a Financial Stability Council to monitor systemic risks and help coordinate efforts to address potential financial vulnerabilities.

Promoting growth
Mexico’s strong economic policy framework will continue ensuring macroeconomic stability over the medium term. But to boost Mexico’s growth potential and employment creation, the IMF identified some areas for further reform efforts.

• Boosting competition. Concentration remains high in key sectors of the economy. The recent passage of strengthened antitrust legislation is welcomed. Measures to further improve the productivity of energy companies would also be important to enhance growth.
• Improving education and labor flexibility. Measures to boost the quality of education could significantly increase investment in human capital in Mexico. Also, expediting reforms to enhance labor flexibility would be an important step toward creating a more dynamic labor market.
• Broadening access to credit. Advancing initiatives to facilitate credit availability for small and medium-sized enterprises could help support investment and growth of these firms, increase their productivity, and bolster employment creation.
• Reinforcing domestic security. The authorities’ ongoing efforts to fight organized crime are critical to foster investment and growth.
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Old 08-15-2011, 01:54 PM
 
Location: Limestone,TN/Bucerias, Mexico
1,452 posts, read 3,000,336 times
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Just a little snippet from the Calgary Herald - no slowdown in tourism despite all the negative press..
[LEFT]


"Mexican Consul General Miguel Tovar hosted a dinner for Calgary travel agents earlier this week to promote the Pan American Games being held in October throughout the state of Jalisco.

At the event addressed by tourism representatives from Jalisco, WestJet announced it would be increasing its service to Mexico this winter from 42 to 50 flights per week and that by mid-December, it will be taking sun seekers daily to Puerto Vallarta."


Read more: http://www.calgaryherald.com/business/Around+Town+emerge+dominant+players/5245193/story.html#ixzz1V7qQya1t
[/LEFT]
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Old 08-16-2011, 01:15 AM
 
Location: Houston, Texas
1,193 posts, read 1,473,501 times
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Quote:
Originally Posted by SarahSal View Post
Just a little snippet from the Calgary Herald - no slowdown in tourism despite all the negative press..
[LEFT]
"Mexican Consul General Miguel Tovar hosted a dinner for Calgary travel agents earlier this week to promote the Pan American Games being held in October throughout the state of Jalisco.
At the event addressed by tourism representatives from Jalisco, WestJet announced it would be increasing its service to Mexico this winter from 42 to 50 flights per week and that by mid-December, it will be taking sun seekers daily to Puerto Vallarta."
Read more: http://www.calgaryherald.com/business/Around+Town+emerge+dominant+players/5245193/story.html#ixzz1V7qQya1t
[/LEFT]
I think it's because most travelers investigate the places they'll be traveling too and most must have seen that the violence is primarily concentrated in the northern states. At least that's what many tourists answered in these interviews I have seen on YouTube.
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Old 08-22-2011, 04:02 PM
 
25,058 posts, read 25,898,643 times
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Mexico's economy would do a lot better if they can get the political corruption down to low levels and wrap up the drug wars and increase their purchasing power by not going on insane money printing like they did in the 1990s, I believe. And withdraw from NAFTA so that our cheap, mechanized, BigAg imports don't hurt the rural peasant farmers and cause them to illegally emigrate to the U.S. It's no coincidence that illegal immigration from Mexico has skyrocketed ever since NAFTA was signed by Mexico
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Old 08-22-2011, 04:17 PM
 
836 posts, read 2,782,391 times
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Quote:
Originally Posted by theunbrainwashed View Post
Mexico's economy would do a lot better if they can get the political corruption down to low levels and wrap up the drug wars and increase their purchasing power by not going on insane money printing like they did in the 1990s, I believe. And withdraw from NAFTA so that our cheap, mechanized, BigAg imports don't hurt the rural peasant farmers and cause them to illegally emigrate to the U.S. It's no coincidence that illegal immigration from Mexico has skyrocketed ever since NAFTA was signed by Mexico
Ha Ha, the ones going on insane money printing are the USA...
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Old 08-22-2011, 05:04 PM
 
Location: Miami
888 posts, read 773,981 times
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Quote:
Originally Posted by mexguy View Post
Ha Ha, the ones going on insane money printing are the USA...
Yeah, but US people still think they are powerful enough to be able to tell countries like México what to do.

Many Americans still don't realize that the US dollar has been heavily devalued. Even the Canadian dollar is trading at near parity or is slightly worth more than the US dollar.
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Old 08-22-2011, 08:18 PM
 
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Quote:
Originally Posted by Wynwood View Post
Yeah, but US people still think they are powerful enough to be able to tell countries like México what to do.

Many Americans still don't realize that the US dollar has been heavily devalued. Even the Canadian dollar is trading at near parity or is slightly worth more than the US dollar.
Wrong. It's not Americans, it's the foreign policy of the US government. Big difference between the two.

Nope, they don't. They're not gonna notice until they finally realize our money is buying half of the groceries we used to buy a couple months ago.

Quote:
Originally Posted by mexguy View Post
Ha Ha, the ones going on insane money printing are the USA...
Tell me something I don't already know. Mexico suffered in the 1990s for going on insane money printing and devalued the peso to toilet paper. We're gonna go the same way when we have the same purchasing power as those south of the border if we don't stop this senseless printing and get our fiscal house in order.
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Old 08-22-2011, 10:18 PM
 
Location: Victoria TX
42,661 posts, read 81,117,220 times
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Quote:
Originally Posted by Wynwood View Post
Yeah, but US people still think they are powerful enough to be able to tell countries like México what to do.

Many Americans still don't realize that the US dollar has been heavily devalued. Even the Canadian dollar is trading at near parity or is slightly worth more than the US dollar.
Between the two sharp recessions (2008-9 and this month), the value of the Mexican Peso against the US dollar experienced a steady, straight line increase by about 10% in those 28 months.
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Old 08-22-2011, 11:35 PM
 
25,058 posts, read 25,898,643 times
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Originally Posted by jtur88 View Post
Between the two sharp recessions (2008-9 and this month), the value of the Mexican Peso against the US dollar experienced a steady, straight line increase by about 10% in those 28 months.
And of course, the big question is, is the increase due to the Mexican peso increasing in value, or the US dollar declining in value?
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Old 08-23-2011, 12:27 AM
 
Location: Victoria TX
42,661 posts, read 81,117,220 times
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Quote:
Originally Posted by theunbrainwashed View Post
And of course, the big question is, is the increase due to the Mexican peso increasing in value, or the US dollar declining in value?
Of course, it's the dollar, but the Peso is holding its own in terms of international exchange rates. Whatever their economic policy is, the value of the peso is not eroding against the world's currencies, and more importantly, not being dragged down along with the USD.
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