The Economy of Mexico is the 14th largest in the world and second in Latin America after Brasil. We will talk about the actual economic situation in Mexico.
In December 2012, President Peña Nieto was elected, and with him came the promise to increase Mexico’s growth potential, but in the first quarter of 2013 sluggish sales to United States crippled the market. The U.S. is Mexico’s largest export market, which was reduced to a 0.8% compared with the same period a year ago.
Investors who were confident about Mexico’s economic potential at the start of this year are now having misgivings. The stock market fell to an eight-month low on May, compared to Brazil´s which is the main competitor of Mexico in Latin America and has recently been perfoming much better.
Also foreign direct investment last year plunged to $12.7 billion from an average of $23 billion, this is a huge outflow of foreign investment. Some economists pointed out that high levels of drug-related crime may also be taking a toll on investments, notably in tourism, that’s why Mexico last year slipped out of the tenth place, as a global touristic destinations according to the UNWTO (United Nations of World Tourism Organization).
Mexico Economy
To close the last quarter of this year, numbers would be risky, part of the motivation for the tax reforms that Peña Nieto is going to implement , is that the country is too dependent on the vagaries of global economy, and needs to generate more of its own by dynamically increasing and impulsing business at home.
According to the OECD (Organization for Economic Co-operation and Development), recent reforms to increase the effectiveness of education, telecommunications, media and banking industries, may give an economic growth if they are fully implemented, but also Mexico needs to go further to achieve the projects that have been planned.
Later this year the goverment hopes to push radical reforms, but people are against it. The new tax reform will deeply affect small and medium sized companies, as well as the middle class in Mexico. This reform needs to be further reviewed and changes must be made before it is implemented.
Gross Domestic Product is showing weaknesses due to sales that are flat, exports ticked up in July and are still going down to close the year, the inflation rate fell into its lowest level, and the peso depreciated against a solid dollar last month. Also natural disasters are expected to make a notable impact between one or two tenths on the GDP.
As mexicans or as foreigners living in Mexico, we truly hope everything can turn out better at the end of the year. the consumption rates are lower than last year due to all the uncertainty the country is living.
I consider the Mexican President should implement what’s best for everyone, being equal because there is a wider gap between poor people and rich people, poor people get poorer and rich people get richer, but also the community should be informed and have the interest to leave ignorance behind, so things can work out in a positive way.
By Maria Jose Castillo Conde
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