Charting Mexico s Economy

Transcription

1 Charting Mexico s Economy Designed to help executives catch up with the economy and incorporate macro impacts into company s planning. Annual subscription includes 2 semiannual issues published in June and December.

2 TABLE OF CONTENT Economic Profile 1 Economic Structure 2 Competitiveness 3 Economic development Part of the country s economic profile, economic structure section gives readers useful views to understand what matters for the Mexican economy. What is the size of the Mexico s economy in relation to world s major economies? What is the size of Mexico s population? What is the demographic structure of Mexico? Is it favorable for economic growth? How has the structure of Mexico s GDP changed over the years? How much does the Mexico s economy rely on external trade? What are the key regions for the Mexican economy? Part of the country s economic profile, this section explores Mexico s competitiveness in the global level. It also covers the country s attractiveness to foreign direct investment. Which stage of economic development is the Mexico s economy in? How is the average wage in Mexico compared to others in the region? How has the labor productivity in Mexico changed over the years and in relation with comparable countries? How competitive is Mexico? How are Mexico s competitive factors compared to those of other countries? Is it easy to do business in Mexico? What are most problematic factors in doing business in Mexico? How good is Mexico in attracting Foreign Direct Investment? Part of the country s economic profile, this section explores Mexico s average income and its distribution, poverty as well as other development indicators. What is the level of income for an average person in Mexico? Is there still a lot of poor people in Mexico? How does it compare to others? Is unemployment the issue for Mexico? How is income distributed in Mexico and how does it compare to others? What is the current level of human development in Mexico? How has quality of life in Mexico changed over the years?

3 TABLE OF CONTENT Economic Outlook 4 Economic Growth 5 Macro Risks Appendices Part of the country s economic outlook, this section explores Mexico s recent economic growth, its key drivers and well as the growth outlook for the coming years. What has been the growth rate of Mexico s economy over the past 10 years and how does it compare with others? What were the key growth drivers for the Mexico s economy in the past year? What were the source of growth for Mexico s economy in the last 5 quarters? What is the growth outlook for Mexico s economy over the next 3 years and how does it compare with others? How has the growth outlook for Mexico changed over the past few months? This section explores Mexico s macro-economic risks, including inflation, financial sector, budget deficit as well as balance of payment and exchange rate. What is the risk of inflation in Mexico and how does it compare with others? How healthy is the Mexico s banking sector? What has been the return of the stock markets and how does it compare with others? What is the fiscal risk in Mexico? What is the balance of payment risk for Mexico? How good is the country in getting foreign exchange by the mean of commerce? Does Mexico have enough international reserves to service its debt and for import? What is the FX risk? How has the MXN performed compared to other currencies? Appendix 1: Key projections from latest IMF s world economic outlook report. GDP growth Inflation Population Unemployment rate Government budget and debt Current account Appendix 2: World Bank s Doing Business Report Detailed rankings and scores for Mexico and comparable economies. Starting a business Dealing with construction permits Getting electricity Registering property Getting credit Protecting Minority Investors Paying taxes Trading across borders Enforcing contracts Resolving Insolvency

4 Mexico s economy is the second largest economy in Latin America and 15 th largest in the world 2015 GDP USD billion, Market Exchange Rate US China Japan Germany UK ASEAN* France India Italy Brazil* Canada Korea* Russia Australia Spain Mexico 4,123 3,358 2,849 2,436 2,422 2,091 1,816 1,773 1,552 1,377 1,325 1,224 1,200 1,144 10,983 17,947 Latin America Brazil* Mexico Argentina* Colombia* Chile* Venezuela* Peru Ecuador* Dominican Rep* Guatemala* Uruguay* Costa Rica Panama Bolivia* Paraguay* El Salvador* Honduras Nicaragua* Haiti ,773 1,144 Measuring the size of an economy Size of any economy is usually measured by calculating its Gross Domestic Product (GDP) which is the market value of all officially recognized final goods and services produced within a country in a given period of time. To compare GDP internationally, there is a need to convert value in local currencies to one main currency, normally USD. There are two popular exchange rate to be used. The first one is the official exchange rate for that particular period. The second one is the so called Purchasing Power Parity exchange rate, which takes into account the difference in living expenses between countries. The first method is more popular in comparing the size of each economy. Size of Mexico s economy Using the market exchange rate method, Mexico s GDP is around USD 1,144 billion, the second largest in Latin America and 15 th largest in the world (on an individual country basis). Note: (*) IMF Estimate Source: IMF World Economic Outlook Database April 2016 Charting Economy This is a licensed product and is not to be photocopied 6

5 Minimum wage in Mexico is lower than most emerging economies Statutory nominal gross monthly minimum wage Effective on 31 December 2013, US$ Australia New Zealand Canada South Korea Hong Kong Taiwan Argentina Turkey Chile Brazil Malaysia Philippines Peru Thailand South Africa China ,661 1,959 2,406 International Wage Comparison International Labour Organization collects statutory nominal gross monthly minimum wage from countries around the world. Data on earnings are presented in nominal terms and on the basis of the minimum of monthly earnings of all employees as of December 31st of each year. In cases where a national minimum wage is not mandated, the minimum wage in place in the capital or major city is used. In countries where the minimum wage is set at the sectoral level or occupational level, the minimum wage for manufacturing or unskilled workers is generally applied. Market exchange rate is applied by Charting Economy to get the USD term. Russia Mexico Indonesia Cambodia Laos Wages in Mexico Statutory minimum monthly wages in Mexico was around USD 125, lower than most emerging economies. Viet Nam 55 India 48 Source: ILO; Charting Economy analysis Charting Economy This is a licensed product and is not to be photocopied 14

6 Mexico s economic expansion maintained its new normal pace in 1Q16 India China Indonesia Turkey Peru Australia South Korea Mexico Colombia United States Real GDP growth Year-on-year, 1Q16 Britain Chile Euro area Germany Japan Russia Brazil -5.4% -1.2% 0.1% 3.1% 2.8% 2.6% 2.5% 2.1% 2.0% 2.0% 1.7% 1.6% 4.9% 4.8% 4.4% 7.9% 6.7% Mexico s Real GDP growth Year-on-year, last 8 quarters 1.8% 2.3% 2.6% 2.6% 2.3% 2.7% 2.4% 2.6% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 GDP growth in the latest quarter Real GDP growth in the latest quarter from major economies in the world sorted from highest to lowest. GDP growth for Mexico s economy in 1Q16 Mexico s economic expansion maintained its new normal pace in 1Q16, growing 2.6% from the same period the year before. Source: The Economist, OECD; Charting Economy analysis Charting Economy This is a licensed product and is not to be photocopied 32

7 It takes less than a week to start a business in Mexico, although the associated cost can be quite high Starting a business rank Economy Rank DTF* Procedures (number) Time (days) Cost (% of income per capita) Paid in min. capital (% of income per capita) New Zealand Panama Uruguay Chile Mexico Colombia Peru Guatemala Dominican Republic Costa Rica El Salvador Paraguay Honduras Argentina Brazil Bolivia Venezuela, RB Haiti Central African Republic Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate. To make the data comparable across 189 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. The most recent round of data collection for the project was completed in June Starting a Business in Mexico It takes less than a week to start a business in Mexico, although the associated cost can be quite high. Note: (*) An economy s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier Source: Doing Business 2016: Measuring Regulatory Quality and Efficiency Charting Economy This is a licensed product and is not to be photocopied 50

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