Category Archives: Economy

U.S. Fed action deals blow in Mexico

NYT – Like millions of other people from Southeast Asia to Africa to Latin America, Mexicans are absorbing the consequences of a major shift playing out in the global economy. As the Fed lifted rates on Wednesday, it added momentum to a steady stream of money that has been abandoning emerging markets and flowing toward American shores.

https://www.nytimes.com/2017/03/16/business/federal-reserve-interest-rates-china-mexico.html

How a weakened Mexico could hurt U.S.

Five Thirty Eight – President Trump has threatened to dismantle NAFTA, to build a border wall and to slap hefty tariffs on Mexican imports, all moves that could hobble Mexico’s economy. While the Trump administration might argue that these policies are more about “Making America Great Again” than hurting Mexico, there is reason for concern that they might hurt the U.S. One risk is that the policies themselves could damage the American economy, for example, through higher consumer prices and reduced trade.

https://fivethirtyeight.com/features/how-a-weakened-mexican-economy-could-threaten-u-s-security/

Chinese wages are higher than Mexico, Brazil

China Economic Review – Average wages in China’s manufacturing sector have soared above those in countries such as Brazil and Mexico. Average hourly wages in China’s manufacturing sector trebled between 2005 and 2016 to $3.60, according to Euromonitor, while during the same period manufacturing wages fell from $2.90 an hour to $2.70 in Brazil, from $2.20 to $2.10 in Mexico, and from $4.30 to $3.60 in South Africa.

http:o//www.chinaeconomicreview.com/chinese-wages-higher-brazil-mexico

Yanking $320 million in aid to Mexico could backfire

USAToday – The United States directs an average of $320 million worth of aid a year to Mexico for various programs, all of which appear to be targets for President Trump as he looks for ways to pay for the proposed border wall with our southern neighbor. But specialists say the aid won’t make for much of a bargaining chip as he tries to goad Mexico into footing the bill for the wall, and in fact, yanking the aid could backfire entirely.

http://www.usatoday.com/story/news/politics/2017/01/26/us-aid-320-million-mexico-wall-trump-specialists-backfire/97103024/

Mexico makes new friends at Davos

BBC – It’s not every day you see a Mariachi band dressed in full regalia at an Alpine ski lodge. But Mexico Night at Davos is no ordinary event. An evening of tapas and tequila – this annual affair is organised by the government’s international trade body, ProMexico, to promote the country’s business interests at the World Economic Forum, and schmooze potential investors to the sound of “Besame Mucho”.

http://www.bbc.com/news/business-38677103

Mexico lures undeclared cash with tax plan

Reuters – Mexico said it will offer holders of undeclared capital abroad tax incentives to bring it home in a bid to lure some $10 billion in investment and steel itself against potential shocks from the incoming Trump administration. The government said it will offer an 8 percent repatriation tax on those funds returning to Mexico in six months, provided they go into investments including fixed assets and property for at least two years.

http://www.reuters.com/article/us-mexico-tax-idUSKBN1512WA

Mexico’s Trump “contingency plan” isn’t working

CNN – Mexico’s “contingency plan” to protect its economy from the “hurricane” effect of Donald Trump’s electoral victory isn’t working. On Thursday, Mexico’s central bank tried to prop up its battered currency, the peso, by selling dollars to international investors. It’s the latest move by Mexico to stop the peso’s bleeding from Trump’s threats to use tariffs, build a wall and tear up a trade deal.

http://money.cnn.com/2017/01/05/news/economy/mexico-peso-trump-contigency-plan/

Wal-Mex, Liverpool likely hit hardest by gas hike

Bloomberg – Mexican consumer companies from Wal-Mart to Liverpool SAB might see sales flag as the country raises gasoline prices by as much as 20 percent in January. Retailers might be the most affected by the jump in prices, which risks eroding consumer sentiment and purchasing power amid a weakening peso that has already fueled concern about inflation. Supermarket operators Chedraui and Organizacion Soriana might also take a hit as the cost of gasoline takes a bigger portion of consumers’ budgets.

https://www.bloomberg.com/news/articles/2017-01-03/mexico-gasoline-hikes-seen-curbing-sales-at-walmex-liverpool

Minimum wage rises almost 10 percent

WSJ – Mexico’s minimum wage rose almost 10% on Jan. 1, in a jolt to the system meant to stoke the poorest workers’ buying power, which has been eroded by recessions and past bouts of high inflation. But the prospect of higher earnings is doing little to dent pessimism among consumers, who head into 2017 facing rising fuel costs, higher interest rates and a weakening peso that closed 2016 near record lows against the U.S. dollar.

http://www.wsj.com/articles/mexicos-minimum-wage-set-to-rise-nearly-10-1483185607

Carstens to take international post

NYT -The governor of Mexico’s central bank, Agustín Carstens, will leave his position next July, adding to the uncertainty that has rattled the country’s economy since the election of Donald J. Trump. Carstens, 58, a well-regarded economist, will leave the Bank of Mexico, where he has been governor for seven years, to lead the Bank for International Settlements, a financial institution based in Basel, Switzerland, that acts as a bank for central banks.

http://www.nytimes.com/2016/12/01/business/international/mexicos-central-bank-chief-to-take-international-post.html?_r=0

Can oil help Mexico withstand Trump attack on trade? It’s hard to see how

The Pemex Miguel Hidalgo refinery in Tula de Allende, in the state of Hidalgo, north of Mexico City. (Janet Jarman/New York Times)
The Pemex Miguel Hidalgo refinery in Tula de Allende, in the state of Hidalgo, north of Mexico City. (Janet Jarman/New York Times)

By Elisabeth Malkin / New York Times

The town that oil built is emptying out.

“For Sale” signs are plastered on concrete-block houses and sun-bleached bungalows alike. The idled oil workers who used to cluster in the main square, hoping to pick up odd jobs, have moved on.

In Ciudad del Carmen, on the gulf coast of Mexico, even the ironclad union positions are slipping away. Some roughnecks on the offshore rigs of the national oil company, Pemex, have not worked in months, and their voices are filled with anxiety.

“What do you think is going to happen?” some ask.

Pemex has been limping along for years, bleeding billions of dollars annually, saddled with debt and struggling to maintain production as its giant oil fields in the Gulf of Mexico run dry. Next year, it will pump less than two million barrels a day, the lowest output since 1980.

Fixing the oil company was already at the top of Mexico’s list of priorities, the focus of a long debate over the fate of one of its most important — and troubled — national institutions.

Now, that mammoth undertaking has become all the more critical with the United States’ election of Donald J. Trump. As Mexicans steel themselves for an American president who made upending his nation’s relationship with Mexico a cornerstone of his campaign, officials on this side of the border have hastened to reassure the country that Mexico’s economy is sound.

http://www.nytimes.com/2016/11/27/world/americas/mexico-oil-pemex-donald-trump.html

With unfriendly neighbor, Mexico needs to strengthen itself

Economist – Almost 25 years ago a Mexican president, Carlos Salinas, took a historic decision. He decreed that his country’s future lay in setting aside its fear and resentment of its mighty neighbour to the north and embracing economic integration with the United States through the North American Free-Trade Agreement (NAFTA). The agreement underpinned the modernisation of part of Mexico’s economy. So the imminent arrival in the White House of Donald Trump, a critic of NAFTA who threatens to build a migrant-blocking wall between the two countries, looks like a disaster for Mexico.

http://www.economist.com/news/americas/21710839-pi-ata-politics-unfriendly-neighbour-mexico-needs-strengthen-itself