| MEXICO |
Economy:
Mexico has a free market economy in the trillion dollar class. It contains a mixture of
modern and outmoded industry and agriculture, increasingly dominated by the private
sector. Recent administrations have expanded competition in seaports, railroads,
telecommunications, electricity generation, natural gas distribution, and airports. Per capita
income is roughly one-third that of the US; income distribution remains highly unequal.
Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994,
Mexico's share of US imports has increased from 7% to 12%, and its share of Canadian
imports has doubled to 5%. Mexico has free trade agreements with over 50 countries
including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan,
putting more than 90% of trade under free trade agreements. In 2007, during its first year
in office, the Felipe CALDERON administration was able to garner support from the
opposition to successfully pass pension and fiscal reforms. The administration passed an
energy reform measure in 2008 and another fiscal reform in 2009. Mexico's GDP plunged
6.5% in 2009 as world demand for exports dropped, asset prices tumbled, and remittances
and investment declined. GDP posted positive growth of 5% in 2010, with exports -
particularly to the United States - leading the way, while domestic consumption and
investment lagged. The administration continues to face many economic challenges,
including improving the public education system, upgrading infrastructure, modernizing
labor laws, and fostering private investment in the energy sector. CALDERON has stated
that his top economic priorities remain reducing poverty and creating jobs.
GDP (purchasing power parity):
$1.567 trillion (2010 est.)
country comparison to the world: 12
$1.486 trillion (2009 est.)
$1.582 trillion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate):
$1.039 trillion (2010 est.)
GDP - real growth rate:
5.5% (2010 est.)
country comparison to the world: 61
-6.1% (2009 est.)
1.5% (2008 est.)
GDP - per capita (PPP):
$13,900 (2010 est.)
country comparison to the world: 85
$13,400 (2009 est.)
$14,400 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
agriculture: 4.2%
industry: 33.3%
services: 62.5% (2010 est.)
Exports - commodities:
manufactured goods, oil and oil products, silver, fruits, vegetables, coffee, cotton
Exports - partners:
US 80.5%, Canada 3.6%, Germany 1.4% (2009 est.)
Imports - commodities:
metalworking machines, steel mill products, agricultural machinery, electrical equipment,
car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts
Imports - partners:
US 48%, China 13.5%, Japan 4.8%, South Korea 4.6%, Germany 4.1% (2009 est.)
Key findings extracted from IMF Report - Mexico: Staff Report for the 2011
Article IV Consultation (August 2011)
Context. Following a sharp decline in 2009, output growth has rebounded strongly,
attesting to Mexico’s strong fundamentals and skillful policy making. Strong exports
are leading the recovery, with a rebound in domestic demand sustaining the
momentum. Strong growth is envisaged to continue this year and into 2012, bringing
output in line with potential, amid benign domestic inflationary conditions. Presidential
elections will take place in July 2012, with the new government in office in December.
Risks. Important downside risks persist, linked to the global outlook. A more protracted
slowdown in the U.S. would be a material drag to Mexico’s growth, given its close
integration with the U.S. economy. Although the direct impact from unsettled market
conditions in Europe would remain contained (with the bank channel considered to be
well ring-fenced), a surge in global risk aversion and generalized flight to quality could
affect even strong sovereign credits, like Mexico’s.
Policy Challenges. With Mexico’s economy expected to continue on a firm recovery, the
challenge ahead is how to gradually adjust the overall policy stance and rebuild policy
buffers, weighing domestic cyclical conditions against the potential impact of increased
global downside risks. As fiscal consolidation is judiciously underway, the central bank will
need to continue assessing the evolution of domestic and external circumstances in the
coming months in deciding the course of monetary policy going forward.
Over the medium term, the task remains how to unleash Mexico’s growth potential and
employment generation, while tackling its long-term fiscal challenges. Advancing
structural reforms would be key to increasing Mexico’s growth, particularly in an
environment of sluggish external demand. Addressing longer term fiscal challenges
from oil revenues and age-related spending to ensure fiscal sustainability will require a
combination of revenue mobilization efforts and expenditure rationalization.
Click here to view full report
Banking
Mexico's commercial banks offer a full spectrum of services ranging from deposit
accounts, consumer and commercial lending, corporate finance, trusts and mutual
funds, to foreign exchange and money market trading. Currently, 41 banks are
operating in Mexico; seven of them have 87% of the market share by total assets and
four banks are linked with retail stores.
Mexico's commercial banking sector has been opened to foreign competition. The North
American Free Trade Agreement (NAFTA) permits U.S. and Canadian banks or any
other foreign bank with a subsidiary in the United States or Canada to establish wholly
owned subsidiaries in Mexico. Further, they are allowed to undertake financial inter-
mediation or to solicit customers for their parent bank. Almost all major banks, with the
exception of Banorte, are under the control of foreign banks.
Following the 1994 peso crisis, banks in Mexico have been very cautious in their
lending, preferring to provide loans only to their most sound customers. However, now
banks are beginning to implement programs for lending to a wider range of companies,
although at relatively high rates. In general, small and medium enterprises (SMEs) have
trouble accessing credit.
According to the Bank of Mexico ( BANXICO), in the first quarter of 2010 only 21% of
Mexican companies received financing from banks, while more than 84% obtained it
through suppliers. Moreover, 95% of the Mexican private sector is comprised of micro
companies, most of which, have limited access to credit.
The Mexican Government has enacted several incentives to encourage more lending to
SMEs, but it remains to be seen whether the largest segment of the Mexican economy
will gain better access to credit.
The Secretariat of Treasury & Public Credit (SHCP), the National Banking and Securities
Commission (CNBV), and the Bank of Mexico (BANXICO) are the principal regulators of
the banking system.
The Secretariat of Treasury & Public Credit is concerned with institutional issues such as
licensing and sets credit and fiscal policies. The National Banking and Securities
Commission, a semi-autonomous government agency, is responsible for supervision
and vigilance. The Bank of Mexico (the Central Bank) implements these policies and
also operates inter-bank check clearing and compensation systems.
The Institute for the Protection of Bank Savings (IPAB, replacing the former institution
FOBAPROA) acts as a deposit insurance institution. The Mexican Banking Association
(ABM) represents the interests of Mexico's banks.
Development Banks:
The mission of development banks is to fill financing shortfalls in the commercial banking
sector. Mexico has seven government-owned development banks that provide services
to specific areas of the economy. The dominant institutions are Nacional Financiera
(Nafinsa) and the Foreign Trade Bank (Bancomext). These institutions have become
primarily second-tier banks that lend through commercial banks and other financial
intermediaries such as credit unions, savings and loans, and leasing and factoring
companies. Nafinsa's primary program funds micro, small and medium-sized
businesses. Nafinsa also undertakes strategic equity investments and contributes equity
to joint ventures. Bancomext provides financing to Mexican exports and to small and
medium-sized companies. It also offers working capital, project lending, and training to
firms in several specific sectors that require support, such as textiles and footwear.
Stock Exchange
Founded in 1866, the Mexican Stock Exchange, or Bolsa Mexicana de Valores (BVM), is
Mexico's only stock exchange. It is the second largest stock exchange by market
capitalisation in Latin America. BMV is now itself is a public company which is listed on its
own stock exchange following a 2008 IPO.
The Mexican Stock Exchange actively trades stocks, debentures, debt instruments
(government and corporate bonds), and warrants and other derivatives. Trading is
conducted on a fully electronic trading system, called the BMV-SENTRA Equities System.
Mexico has a free market economy in the trillion dollar class. It contains a mixture of
modern and outmoded industry and agriculture, increasingly dominated by the private
sector. Recent administrations have expanded competition in seaports, railroads,
telecommunications, electricity generation, natural gas distribution, and airports. Per capita
income is roughly one-third that of the US; income distribution remains highly unequal.
Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994,
Mexico's share of US imports has increased from 7% to 12%, and its share of Canadian
imports has doubled to 5%. Mexico has free trade agreements with over 50 countries
including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan,
putting more than 90% of trade under free trade agreements. In 2007, during its first year
in office, the Felipe CALDERON administration was able to garner support from the
opposition to successfully pass pension and fiscal reforms. The administration passed an
energy reform measure in 2008 and another fiscal reform in 2009. Mexico's GDP plunged
6.5% in 2009 as world demand for exports dropped, asset prices tumbled, and remittances
and investment declined. GDP posted positive growth of 5% in 2010, with exports -
particularly to the United States - leading the way, while domestic consumption and
investment lagged. The administration continues to face many economic challenges,
including improving the public education system, upgrading infrastructure, modernizing
labor laws, and fostering private investment in the energy sector. CALDERON has stated
that his top economic priorities remain reducing poverty and creating jobs.
GDP (purchasing power parity):
$1.567 trillion (2010 est.)
country comparison to the world: 12
$1.486 trillion (2009 est.)
$1.582 trillion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate):
$1.039 trillion (2010 est.)
GDP - real growth rate:
5.5% (2010 est.)
country comparison to the world: 61
-6.1% (2009 est.)
1.5% (2008 est.)
GDP - per capita (PPP):
$13,900 (2010 est.)
country comparison to the world: 85
$13,400 (2009 est.)
$14,400 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
agriculture: 4.2%
industry: 33.3%
services: 62.5% (2010 est.)
Exports - commodities:
manufactured goods, oil and oil products, silver, fruits, vegetables, coffee, cotton
Exports - partners:
US 80.5%, Canada 3.6%, Germany 1.4% (2009 est.)
Imports - commodities:
metalworking machines, steel mill products, agricultural machinery, electrical equipment,
car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts
Imports - partners:
US 48%, China 13.5%, Japan 4.8%, South Korea 4.6%, Germany 4.1% (2009 est.)
Key findings extracted from IMF Report - Mexico: Staff Report for the 2011
Article IV Consultation (August 2011)
Context. Following a sharp decline in 2009, output growth has rebounded strongly,
attesting to Mexico’s strong fundamentals and skillful policy making. Strong exports
are leading the recovery, with a rebound in domestic demand sustaining the
momentum. Strong growth is envisaged to continue this year and into 2012, bringing
output in line with potential, amid benign domestic inflationary conditions. Presidential
elections will take place in July 2012, with the new government in office in December.
Risks. Important downside risks persist, linked to the global outlook. A more protracted
slowdown in the U.S. would be a material drag to Mexico’s growth, given its close
integration with the U.S. economy. Although the direct impact from unsettled market
conditions in Europe would remain contained (with the bank channel considered to be
well ring-fenced), a surge in global risk aversion and generalized flight to quality could
affect even strong sovereign credits, like Mexico’s.
Policy Challenges. With Mexico’s economy expected to continue on a firm recovery, the
challenge ahead is how to gradually adjust the overall policy stance and rebuild policy
buffers, weighing domestic cyclical conditions against the potential impact of increased
global downside risks. As fiscal consolidation is judiciously underway, the central bank will
need to continue assessing the evolution of domestic and external circumstances in the
coming months in deciding the course of monetary policy going forward.
Over the medium term, the task remains how to unleash Mexico’s growth potential and
employment generation, while tackling its long-term fiscal challenges. Advancing
structural reforms would be key to increasing Mexico’s growth, particularly in an
environment of sluggish external demand. Addressing longer term fiscal challenges
from oil revenues and age-related spending to ensure fiscal sustainability will require a
combination of revenue mobilization efforts and expenditure rationalization.
Click here to view full report
Banking
Mexico's commercial banks offer a full spectrum of services ranging from deposit
accounts, consumer and commercial lending, corporate finance, trusts and mutual
funds, to foreign exchange and money market trading. Currently, 41 banks are
operating in Mexico; seven of them have 87% of the market share by total assets and
four banks are linked with retail stores.
Mexico's commercial banking sector has been opened to foreign competition. The North
American Free Trade Agreement (NAFTA) permits U.S. and Canadian banks or any
other foreign bank with a subsidiary in the United States or Canada to establish wholly
owned subsidiaries in Mexico. Further, they are allowed to undertake financial inter-
mediation or to solicit customers for their parent bank. Almost all major banks, with the
exception of Banorte, are under the control of foreign banks.
Following the 1994 peso crisis, banks in Mexico have been very cautious in their
lending, preferring to provide loans only to their most sound customers. However, now
banks are beginning to implement programs for lending to a wider range of companies,
although at relatively high rates. In general, small and medium enterprises (SMEs) have
trouble accessing credit.
According to the Bank of Mexico ( BANXICO), in the first quarter of 2010 only 21% of
Mexican companies received financing from banks, while more than 84% obtained it
through suppliers. Moreover, 95% of the Mexican private sector is comprised of micro
companies, most of which, have limited access to credit.
The Mexican Government has enacted several incentives to encourage more lending to
SMEs, but it remains to be seen whether the largest segment of the Mexican economy
will gain better access to credit.
The Secretariat of Treasury & Public Credit (SHCP), the National Banking and Securities
Commission (CNBV), and the Bank of Mexico (BANXICO) are the principal regulators of
the banking system.
The Secretariat of Treasury & Public Credit is concerned with institutional issues such as
licensing and sets credit and fiscal policies. The National Banking and Securities
Commission, a semi-autonomous government agency, is responsible for supervision
and vigilance. The Bank of Mexico (the Central Bank) implements these policies and
also operates inter-bank check clearing and compensation systems.
The Institute for the Protection of Bank Savings (IPAB, replacing the former institution
FOBAPROA) acts as a deposit insurance institution. The Mexican Banking Association
(ABM) represents the interests of Mexico's banks.
Development Banks:
The mission of development banks is to fill financing shortfalls in the commercial banking
sector. Mexico has seven government-owned development banks that provide services
to specific areas of the economy. The dominant institutions are Nacional Financiera
(Nafinsa) and the Foreign Trade Bank (Bancomext). These institutions have become
primarily second-tier banks that lend through commercial banks and other financial
intermediaries such as credit unions, savings and loans, and leasing and factoring
companies. Nafinsa's primary program funds micro, small and medium-sized
businesses. Nafinsa also undertakes strategic equity investments and contributes equity
to joint ventures. Bancomext provides financing to Mexican exports and to small and
medium-sized companies. It also offers working capital, project lending, and training to
firms in several specific sectors that require support, such as textiles and footwear.
Stock Exchange
Founded in 1866, the Mexican Stock Exchange, or Bolsa Mexicana de Valores (BVM), is
Mexico's only stock exchange. It is the second largest stock exchange by market
capitalisation in Latin America. BMV is now itself is a public company which is listed on its
own stock exchange following a 2008 IPO.
The Mexican Stock Exchange actively trades stocks, debentures, debt instruments
(government and corporate bonds), and warrants and other derivatives. Trading is
conducted on a fully electronic trading system, called the BMV-SENTRA Equities System.
Background:
The site of advanced Amerindian civilizations,
Mexico came under Spanish rule for three
centuries before achieving independence early
in the 19th century. A devaluation of the peso in
late 1994 threw Mexico into economic turmoil,
triggering the worst recession in over half a
century. The global financial crisis beginning in
late 2008 caused another massive economic
downturn the following year. As the economy
recovers, ongoing economic and social
concerns include low real wages,
underemployment for a large segment of the
population, inequitable income distribution, and
few advancement opportunities for the largely
Amerindian population in the impoverished
southern states. The elections held in 2000
marked the first time since the 1910 Mexican
Revolution that an opposition candidate -
Vicente FOX of the National Action Party (PAN)
- defeated the party in government, the
Institutional Revolutionary Party (PRI). He was
succeeded in 2006 by another PAN candidate
Felipe CALDERON. National elections, including
the presidential election, are scheduled for July
2012. Since 2007, Mexico's powerful
drug-trafficking organizations have engaged in
bloody fueding, resulting in tens of thousands
of drug-related homicides.
Government type:
federal republicCapital:
name: Mexico (Distrito Federal)
time difference: UTC-6
daylight saving time: +1hr, begins first Sunday
in April; ends last Sunday in October
note: Mexico is divided into four time zones
Independence:
16 September 1810 (from Spain)
National holiday:
Independence Day, 16 September (1810)
Constitution:
5 February 1917
Legal system:
mixture of US constitutional theory and civil law
system; judicial review of legislative acts;
accepts compulsory ICJ jurisdiction, with
reservations
Suffrage:
18 years of age; universal and compulsory (but
not enforced)
Government:
Chief of state: President Felipe de Jesus
CALDERON Hinojosa (since 1 December
2006); note - the president is both the chief of
state and head of government
head of government: President Felipe de Jesus
CALDERON Hinojosa (since 1 December 2006)
cabinet: Cabinet appointed by the president;
note - appointment of attorney general requires
consent of the Senate
elections: president elected by popular vote for
a single six-year term; election last held on 2
July 2006 (next to be held 1 July 2012)
election results: Felipe CALDERON elected
president; percent of vote - Felipe CALDERON
35.9%, Andres Manuel LOPEZ OBRADOR
35.3%, Roberto MADRAZO 22.3%, other 6.5%
For names of current Ministers, click here.
Disputes - international:
Abundant rainfall in recent years along much of
the Mexico-US border region has ameliorated
periodically strained water-sharing
arrangements; the US has intensified security
measures to monitor and control legal and
illegal personnel, transport, and commodities
across its border with Mexico; Mexico must deal
with thousands of impoverished Guatemalans
and other Central Americans who cross the
porous border looking for work in Mexico and
the United States
All the information on this page sourced from
the CIA World Factbook, the US Commercial
Service and relevant FATF M.E.R.
The site of advanced Amerindian civilizations,
Mexico came under Spanish rule for three
centuries before achieving independence early
in the 19th century. A devaluation of the peso in
late 1994 threw Mexico into economic turmoil,
triggering the worst recession in over half a
century. The global financial crisis beginning in
late 2008 caused another massive economic
downturn the following year. As the economy
recovers, ongoing economic and social
concerns include low real wages,
underemployment for a large segment of the
population, inequitable income distribution, and
few advancement opportunities for the largely
Amerindian population in the impoverished
southern states. The elections held in 2000
marked the first time since the 1910 Mexican
Revolution that an opposition candidate -
Vicente FOX of the National Action Party (PAN)
- defeated the party in government, the
Institutional Revolutionary Party (PRI). He was
succeeded in 2006 by another PAN candidate
Felipe CALDERON. National elections, including
the presidential election, are scheduled for July
2012. Since 2007, Mexico's powerful
drug-trafficking organizations have engaged in
bloody fueding, resulting in tens of thousands
of drug-related homicides.
Government type:
federal republicCapital:
name: Mexico (Distrito Federal)
time difference: UTC-6
daylight saving time: +1hr, begins first Sunday
in April; ends last Sunday in October
note: Mexico is divided into four time zones
Independence:
16 September 1810 (from Spain)
National holiday:
Independence Day, 16 September (1810)
Constitution:
5 February 1917
Legal system:
mixture of US constitutional theory and civil law
system; judicial review of legislative acts;
accepts compulsory ICJ jurisdiction, with
reservations
Suffrage:
18 years of age; universal and compulsory (but
not enforced)
Government:
Chief of state: President Felipe de Jesus
CALDERON Hinojosa (since 1 December
2006); note - the president is both the chief of
state and head of government
head of government: President Felipe de Jesus
CALDERON Hinojosa (since 1 December 2006)
cabinet: Cabinet appointed by the president;
note - appointment of attorney general requires
consent of the Senate
elections: president elected by popular vote for
a single six-year term; election last held on 2
July 2006 (next to be held 1 July 2012)
election results: Felipe CALDERON elected
president; percent of vote - Felipe CALDERON
35.9%, Andres Manuel LOPEZ OBRADOR
35.3%, Roberto MADRAZO 22.3%, other 6.5%
For names of current Ministers, click here.
Disputes - international:
Abundant rainfall in recent years along much of
the Mexico-US border region has ameliorated
periodically strained water-sharing
arrangements; the US has intensified security
measures to monitor and control legal and
illegal personnel, transport, and commodities
across its border with Mexico; Mexico must deal
with thousands of impoverished Guatemalans
and other Central Americans who cross the
porous border looking for work in Mexico and
the United States
All the information on this page sourced from
the CIA World Factbook, the US Commercial
Service and relevant FATF M.E.R.
| KnowYourCountry |
| Last Updated: 14 September 2011 |
|