Mexico: Economic and Political Situation
Mexico: Economic and Political Situation
November, 2005
Current issues
International conditions: an extra mile
Growth: switching engines, same gear
2006: how much of a crossroad?
Final remarks
Yet another conundrum? Bp
% 5.1
EMBI 535
4.7 435 4.3 335
3.9 10-years bond USA
235
J 04
J
J 05
J
3.5 N
Interest rates %
12.4
10-years 10.4
8.4
1-Month 6.4
4.4 Ju 01
Ja 02
J
Ja 03
J
Ja 04
J
Ja 05
J
N
Low growth %
GDP Growth
12 8 4 1.9
2.9
0 -4
MEXICO: DESTINATION OF EXPORTS
-8 81
85
89
93
97
01
05
Asia 2 EU 4
Others 5
Canada 2
USA 87
China vs. Mexico EXPORT STRUCTURE 100 80 60 USA MARKET SHARE Jan-Jul. 05
40
Market share Mexico China
20 0
Apparel and footwear
China
Gain / Loss Mexico China
7.9
36.0
-1.1
6.8
14.3
29.3
-0.7
3.5
17.0
1.8
-0.5
0.5
Others
5.9
12.1
0.0
0.7
Manufacturing
9.9
14.0
-0.6
2.0
10.2
14.0
-0.5
1.4
Mexico Electricals and electronics
Food
Commodities
Fuels
Minerals
Manufacturing
Automobile industry
Total
Presidential elections
2006: How much of a crossroad?
Poll war Average: PRI over PAN
Average: PAN over PRI
36 30 27
34.5 33 26
39 29 25
35
35
30
30
27
37 33
29 25
AMLO 34 33
34
33 33 32 Calderón 27 24 Madrazo
28
Others 7 Milenio
8
6
5
Bimsa Consulta ARCOP
6
5 GEA
11
Gaussc Reforma
Source: Polls published in Oct/Nov, net of undecided voters.
Voting intentions Presidential Candidates
36 AMLO 32 Calderón 28 Madrazo
Legislative Elections PRI
Sep Dec Mar Jun Sep Dec Mar Jun Sep Nov 03 04 05
34 34
28
PAN PRD Banamex’s own analysis Sep Dec Mar Jun Sep Dec Mar Jun Sep Nov 03 04 05
Political risk: Brazil’s 2002 elections Country risk (EMBI) Bp Lula wins
2500 Lula’s solid advantage in the polls 2000 36% voting intention for Lula Dispute with Serra 1500
Brazil
1000
500 Emerging countries 0 D 99
D 00
D 01
D 02
D 03
Less vulnerability % of GDP
PUBLIC DEFICIT 3.5
Broad
2.2
2.5
1.5 Traditional
1.5
0.5
0.2
PUBLIC DEBT -0.2
-0.5 00
01
02
03
04
05
50
06 38
40
30
20 00
01
02
03
04
05-I
Foreign portfolio investment: fixed income Billion US$
Fixed interest rate, one year or less
25
20
Indexed to exchange rate
15
10
5
+ 10 years 5-10 years 3-5 years less than 3 years Indexed to inflation
0 91
93
95
97
99
01
03
S 05
Final remarks Short-term volatility: “Extra mile” from international conditions Debt dynamics and financial position A backlash? The “Mexico is not Venezuela” theory Minority in Congress? Risks on the downside as well as on the upside Beyond 2006: How to articulate stablility + growth?
Forecasts 2004
2005
2006
GDP (%)
4.4
2.9
3.5
US Manufacturing Industry (%)
4.8
3.5
3.5
Fiscal Balance (% of GDP)
-0.9
-2.1
-1.5
Current Account (mmd)
-7.4
-8.0
-10.2
-1.1
-1.1
-1.4
5.2
3.5
3.5
Average
6.8
9.3
8.3
End of period
8.5
8.8
7.8
Average
11.3
10.9
11.5
End of period
11.2
10.9
11.6
% of GDP Inflation (%) Interest rates (28-day Cetes, %)
Exchange rate (pesos per dollar)
November, 2005
Current issues
International conditions: an extra mile
Growth: switching engines, same gear
2006: how much of a crossroad?
Final remarks
Yet another conundrum? Bp
% 5.1
EMBI 535
4.7 435 4.3 335
3.9 10-years bond USA
235
J 04
J
J 05
J
3.5 N
Interest rates %
12.4
10-years 10.4
8.4
1-Month 6.4
4.4 Ju 01
Ja 02
J
Ja 03
J
Ja 04
J
Ja 05
J
N
Low growth %
GDP Growth
12 8 4 1.9
2.9
0 -4
MEXICO: DESTINATION OF EXPORTS
-8 81
85
89
93
97
01
05
Asia 2 EU 4
Others 5
Canada 2
USA 87
China vs. Mexico EXPORT STRUCTURE 100 80 60 USA MARKET SHARE Jan-Jul. 05
40
Market share Mexico China
20 0
Apparel and footwear
China
Gain / Loss Mexico China
7.9
36.0
-1.1
6.8
14.3
29.3
-0.7
3.5
17.0
1.8
-0.5
0.5
Others
5.9
12.1
0.0
0.7
Manufacturing
9.9
14.0
-0.6
2.0
10.2
14.0
-0.5
1.4
Mexico Electricals and electronics
Food
Commodities
Fuels
Minerals
Manufacturing
Automobile industry
Total
Presidential elections
2006: How much of a crossroad?
Poll war Average: PRI over PAN
Average: PAN over PRI
36 30 27
34.5 33 26
39 29 25
35
35
30
30
27
37 33
29 25
AMLO 34 33
34
33 33 32 Calderón 27 24 Madrazo
28
Others 7 Milenio
8
6
5
Bimsa Consulta ARCOP
6
5 GEA
11
Gaussc Reforma
Source: Polls published in Oct/Nov, net of undecided voters.
Voting intentions Presidential Candidates
36 AMLO 32 Calderón 28 Madrazo
Legislative Elections PRI
Sep Dec Mar Jun Sep Dec Mar Jun Sep Nov 03 04 05
34 34
28
PAN PRD Banamex’s own analysis Sep Dec Mar Jun Sep Dec Mar Jun Sep Nov 03 04 05
Political risk: Brazil’s 2002 elections Country risk (EMBI) Bp Lula wins
2500 Lula’s solid advantage in the polls 2000 36% voting intention for Lula Dispute with Serra 1500
Brazil
1000
500 Emerging countries 0 D 99
D 00
D 01
D 02
D 03
Less vulnerability % of GDP
PUBLIC DEFICIT 3.5
Broad
2.2
2.5
1.5 Traditional
1.5
0.5
0.2
PUBLIC DEBT -0.2
-0.5 00
01
02
03
04
05
50
06 38
40
30
20 00
01
02
03
04
05-I
Foreign portfolio investment: fixed income Billion US$
Fixed interest rate, one year or less
25
20
Indexed to exchange rate
15
10
5
+ 10 years 5-10 years 3-5 years less than 3 years Indexed to inflation
0 91
93
95
97
99
01
03
S 05
Final remarks Short-term volatility: “Extra mile” from international conditions Debt dynamics and financial position A backlash? The “Mexico is not Venezuela” theory Minority in Congress? Risks on the downside as well as on the upside Beyond 2006: How to articulate stablility + growth?
Forecasts 2004
2005
2006
GDP (%)
4.4
2.9
3.5
US Manufacturing Industry (%)
4.8
3.5
3.5
Fiscal Balance (% of GDP)
-0.9
-2.1
-1.5
Current Account (mmd)
-7.4
-8.0
-10.2
-1.1
-1.1
-1.4
5.2
3.5
3.5
Average
6.8
9.3
8.3
End of period
8.5
8.8
7.8
Average
11.3
10.9
11.5
End of period
11.2
10.9
11.6
% of GDP Inflation (%) Interest rates (28-day Cetes, %)
Exchange rate (pesos per dollar)
