Ecanal conducts economic research and analysis of economic trends in Mexico's risks and opportunities, and of government policy from the perspective of the private sector with a normative approach. It offers business a structured view of key economic issues and forecasts with a straightforward, direct language, as an aid to company planning.
Ecanal Home
WHERE IS THE ECONOMY? (27 January 2013)
The US and the world economies have entered into a sweet phase, as central banks have signalled to be willing to provide unlimited liquidity at low costs, as their only way to counter continued adjustments in the economies, where weakness prevails. Because of this, equity markets have risen, but they are ignoring that these are extraordinary and not permanent liquidity conditions. Mexico's growth is now almosy stalled, as exports no longer provide enough momentum. We still expect 3.8% growth in 2012 and 3.5% in 2013. The latter, as we expect the new Government inaugurated on 1 December to launch social programs and infrastructure to a degree that domestic demand will be resilient to a weakening external sector. Furthermore, the government has been capable to bring the opposition parties (PAN and PRD) into a "Pact for Mexico", which is likely to result in congressional approval of the most important reform in many years, i.e. the opening up of Pemex to private investment. This alone would mobilize business and investment and deliver growth. Longer term the problem of sustainable growth remains the same as it has been in the past: lack of competitiveness of the economy. The key to address this problem is to avoid excessive peso appreciation and induce monopolies to reduce prices, as has started to happen with mobile telephone and internet rates.