tci 2014 the economy of mexico, the challenge of growth
TRANSCRIPT
The Economy of Mexico, the Challenge of GrowthRogelio Garza
11 November 2014
Lic. José Rogelio Garza GarzaUndersecretary of Industry and Commerce
Economic Perspectives
November 11th, 2014
Diagnosis
Gross Domestic Product of Mexico and United States ofAmerica
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
Estados Unidos
México
Gross Domestic ProductBillion dollars; constant prices
Source: World Economic Forum. International Monetary Fund
Gross Domestic ProductAnnual variations, constant prices
-8
-6
-4
-2
0
2
4
6
8
10
12
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
Estados Unidos
México
USA
Mexico
Source: World Economic Forum, International Monetary Fund
USA
Mexico
3
GDP per capita2005 adjusted purchase order dollars
Despite great progress in strengthening macroeconomicfundamentals, Mexico continues to face significant challenges interms of economic growth.
Four European
Spain
Greece
Ireland
Portugal
East Asia
South Korea
Hong Kong
Malaysia
Singapore
Thailand
Taiwan
China
Mexico
Latin America exc. Mexico
Argentina Guatemala
Bolivia Nicaragua
Brasil Panama
Chile Paraguay
Colombia Peru
Costa Rica Uruguay
Ecuador Venezuela
El SalvadorNote: Regions were calculated using population weighted average.Source: Penn World Table 8.0 for up to 2012 data. For 2013, estimates based on information by World Economic Outlook, april 2014, IMF.
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Productivity in Mexico decreased 0.7 percentannually in the past three decades.
Credit is scarce to business, expensive and notvery progressive.
Insufficient and expensive energy productionin Mexico decreased global competition in themanufacturing sector.
Backwardness in the regulation of economiccompetition by allowing monopolisticpractices.
Human capital with limited capabilities by loweducational performance.
Economic growth in Mexico over the last 30 years was only2.4 percent per year; derived from structural problems in theeconomy.
MexicoPerformance
belowpotential
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Total Factor ProductivityPeriod average annual % variation
The main factor behind the performance of the Mexicaneconomy is the low productivity growth.
Four European
Spain
Greece
Ireland
Portugal
East Asia
South Korea
Hong Kong
Malaysia
Singapore
Thailand
Taiwan
China
Mexico
Latin America exc. Mexico
Argentina Guatemala
Bolivia Panama
Brasil Paraguay
Chile Peru
Colombia Uruguay
Costa Rica Venezuela
Ecuador
United States of America
Note: Regions were estimated as the population weighted average.Source: Penn World Table 8.0.
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Reforms in Action
The magnitude of the challenges we faced required atransforming impulse, which culminated with 11 structuralreforms.
1
2
3
4
Energy Reform
Economic CompetitionReform
Financial Reform
Tax Reform
5
6
Educational Reform
Telecommunications Reform
7
8
9
10
Labour Reform
National Code of Criminal Procedures
New Protection Law (Amparo)
Political-Electoral Reform
11 Reform on Transparency
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Outlook for the future
Strength of the Macroeconomic Framework
Growth withStability
1
Fiscal Discipline
3
Well-capitalized financial
system, with more supply of
credits
5
External accounts at low and financeable
levels
2
Monetary policy focused
on price stability
4
Regime of flexible
exchange rate
6
International Reserves at
Record Highs
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Gross Domestic ProductAnnual variation
Source: SHCP.
The Reforms will increase the potential of the mexican economy to about3.5%, where inertial level, an increase of 5.3% growth by 2018.
4.7%
4.9%5.2%
5.3%
Telecommunications Energy Tax Financial Inertial
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• For Mexico, the Finance Ministry expects growth of 2.7% of GDP by 2014.
• - Other forecasts (2014): OECD, 3.4%, IMF, 2.4%; BM, 2.3%, BANXICO, 2.0-2.8%, Banamex, 3.0%, Bancomer, 2.5%; Survey BANXICO, 2.47%.
• In August 2014, the Global Indicator of Economic Activity (IGAE inSpanish) registered growth of 1.3% compared to August 2013.
• In January-June Industrial Activity is 1.3% higher than that recorded in thesame period of 2013.
• In August 2014, a monthly increase recorded in Gross Fixed Investment of0.37% vs. July. It also registered 4.3% growth compared to August 2013.
• At the end of July 2014 the number of workers affiliated to IMSS stood at16,965,972 people (record high) and recorded an annual increase of 3.7%(603.240 new jobs).
• During January-June 2014, the personnel employed in the manufacturingsector increased 2.0% compared to the same period in 2013.
• In 2013, 38.3 billion of Foreign Direct Investment were recorded. Thesecond quarter of 2014 FDI was 9700 md.
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Industrial Policy
• Metal mechanical
• Textile and leather-dress-shoes
• Wood and Furniture
• Steel
• Food and Drink
• Automotive and car parts
• Aerospace
• Electrical
• Electronic
• Chemical
• Biotechnology
• Pharmacist
• IT
• Creative Industries
• Medical equipment
Mature Dynamic Emerging
Boost productivityIncrease
competitivenessAttract and encourage
emerging sectors
Sector Strategy
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Transversal Strategy
Human Capital
Innoación
Supplier Development
Regional Clusters
Innovation• Linking the productive sector with academia and
researchers
Guidelines
• Proactive and directed
• Conjunction with industry
• Resource Security
• Tracking results
Guidelines
• Consolidation of existing or in training clusters
Guidelines
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Transversal Strategy
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Mature Dynamic Emerging
Human Capital
SupplierDevelopment
RegionalClusters
Innovation
Sector Strategies
Tran
sve
rsal
Str
ate
gie
s
• Incorporation of suppliers value chains through leading companies
• Increased value added production
• Increase the safety and capacity of suppliers to sell at top level producers
• Create a baseline of suppliers
• Bonding with the productive sector
• Link with dynamic sectors
• Create manufacturing regions with definite vocation and uniform standards
• Automotive: NL, Guanajuato, Chihuahua, EdoMex, Ags. and Pue
• Aeronautical: BCN, Chih, QC, NL and Son.
• Electronics: BCN, Jal. and Chih.
• Electrical: NL, QC. and Chih.
• Program intersectoral
linkages
• Joint development projects with high coverage capacity
• Support for industrial restructuring and investments in physical, human and technological capital
• Training center networks development and innovation of high level.
• Development of human capital formation senior
• National initiative to promote the Digital Market.
Industrial PolicyChart
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