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Vital Signs Is the link alive?
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MEXICO¿Un juego de serpientes y escaleras?
Jorge G. GonzalezTrinity University
Recent Economic and Political Events
• Economic recovery in the U.S.• Government gridlock• Political scandals (AMLO and PRI)• Mexico – U.S. relationship
Vital Signs
• Is the link alive?
50
60
70
80
90
100
110
120
U.S. Mexico
Industrial Production Index(January 2000 = 100)
Source: Banco de México and FED www.banxico.org.mx; www.federalreserve.gov
Vital Signs
• Is the link alive?• GDP growth
Real GDP% yearly change
Source: INEGI www.inegi.gob.mx
-10
-5
0
5
10
1994 1996 1998 2000 2002 2004
Vital Signs
• Is the link alive?• GDP growth• Direct foreign investment
Foreign Direct InvestmentBillions of Dollars
Source: Banco de México www.banxico.org.mx
2.64.8 4.4 4.4
11.0 9.5 9.2
12.812.4
13.5
17.2
27.5
17.3
12.9
18.217.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1990 1992 1994 1996 1998 2000 2002 2004
Debt Market Foreign Investment
Billions of Dollars
Source: Banco de México www.banxico.org.mx
0.90.6
0.1 -0.9 0.0
0.9
0.1
0.9
5.2
3.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1996 1998 2000 2002 2004
Stock Market Foreign Investment
Billions of Dollars
Source: Banco de México www.banxico.org.mx
2.8 3.2
-0.7
3.8
0.4 0.2 -0.1 -0.1
-2.5
3.4
-4.0
-2.0
0.0
2.0
4.0
6.0
1996 1998 2000 2002 2004
Vital Signs
• Is the link alive?• GDP growth• Direct foreign investment• Super Peso and foreign sector
Exchange RatePesos per U.S. Dollar
Source: Banco de México www.banxico.org.mx
456789101112
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Exchange RatePesos per U.S. Dollar
Source: Banco de México www.banxico.org.mx
456789101112
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
1995 1997 1999 2001 2003 2005
Inflation Differential vs. Exchange Rate
Inflation
Exchange Rate
317
219
Source: Banco de México www.banxico.org.mx
10
20
30
40
50
60
70
94 - I 95 - I 96 - I 97 - I 98 - I 99 - I 00 - I 01 - I 02 - I 03 - I 04 - I 05 - I
Merchandise TradeBillions of Dollars
Source: Banco de México www.banxico.org.mx
Imports
Exports
Family RemittancesBillions of Dollars
4.2 4.9 4.7 5.9 6.68.9 9.8
13.416.6
20.0
0.0
5.0
10.0
15.0
20.0
1996 1998 2000 2002 2004
Source: Banco de México www.banxico.org.mx
Family RemittancesBillions of Dollars
4.2 4.9 4.7 5.9 6.68.9 9.8
13.416.6
20.0
0.0
5.0
10.0
15.0
20.0
1996 1998 2000 2002 2004
Source: Banco de México www.banxico.org.mx
Vital Signs
• Is the link alive?• GDP growth• Direct foreign investment• Super Peso and foreign sector• Federal government balance
0.2 0.0 0.0
-0.7
-1.1 -1.0 -1.0-0.7
-1.1
-0.6-0.2 -0.1
-2.0
-1.0
0.0
1.0
1994 1996 1998 2000 2002 2004
Government BalanceBalance / GDP
Source: SHCP www.shcp.gob.mx
Vital Signs
• Is the link alive?• GDP growth• Direct foreign investment• Super Peso and foreign sector• Federal government balance• War on inflation
Inflation
Source: Banco de México www.banxico.org.mx
7.05
51.97
27.70
15.7218.61
12.328.96
4.40 5.703.98 5.19 3.33
0
10
20
30
40
50
60
1994 1996 1998 2000 2002 2004
Vital Signs
• Is the link alive?• GDP growth• Direct Foreign Investment• Super Peso and Foreign Sector• Federal Government Balance• War on Inflation
Political Environment
•Presidential elections
Felipe Calderón Roberto Madrazo Andrés López Obrador
Political Environment
•Presidential elections•Structural reform paralysis
• Incredible transformation with stability
• Fox’s legacy: Separation of powers• Much work to be done• Grave danger: Rule of law
A Game of Chutes and Ladders?
A Game of Chutes and Ladders?
