The Bank of Mexico (Banxico) is Mexico's central bank, much like the U.S. Federal Reserve. Like the Fed, Banxico discharges its functions with complete governmental and political autonomy. Its directors are guided by the sole objective of maintaining economic stability, while of course promoting the purchasing power of Mexico's national currency, the peso. The CEO of Banxico is economist Agustín Carstens, a man often in the news here. He was appointed and confirmed in December 2009.
Based upon continuing severe uncertainty in European markets, and questions as to the survivability of the eurozone and the euro itself, Banxico yesterday increased the risk of a "catastrophic economic event" in its 2012 fiscal assessment of Mexico and other nations.
Banxico's statement said, "The world economic outlook has deteriorated significantly, as a result of persistent problems in the eurozone. A majority of our members believe that on balance, reduced growth in the Mexican economy has become more probable." The central bank's directors said that there are already indications of a reduction in the manufacturing sector, and warned that "the risk of a catastrophic event has increased."
Banxico noted that "the fiscal and financial deterioration of Europe continues, with the risk of infecting other national economies," according to a summary of its year-end report by El Universal, a Mexico City newspaper. Banxico also characterized the response to date of European financial ministers as "insufficient to calm jittery markets," added the paper. Given the long and historic economic relationship between Mexico, the United States and Europe, and their mutually dependent financial structures, Banxico fears that continued unresolved eurozone stresses will inevitably affect this country's economy negatively, with probable reduced job growth as one of the results.
Mexico's gross domestic product, or Producto Interno Bruto (PIB) as it's known here, grew about 4.1% in 2011. Banxico says that growth will drop to perhaps 3.2% in 2012. The rate of inflation was 3.4% in 2011, but is expected to rise to about 3.7% in the year just ahead.
Better weather than expected on the horizon in 2012-2013
Aug. 29, 2012 - The $160 billion USD which Mexico has saved back for a rainy day, coupled with tolerable levels of inflation, portend smooth economic sailing for the country, Carstens said today. Experts now say the Mexican economy should grow about 4% in 2012, much more than predicted at the end of last year, and twice that of the United States.
Sept. 12, 2012 - The economic news just keeps getting better for Mexico (in sharp contrast to its neighbor to the north). Today Carstens told a closing session of an economic conference ("Mexico and the New Global Reality") that the national "table was set for 6% economic growth" - three times or more what the United States expects this year and next (2013). Carstens said that "structural reforms" would be necessary, especially with respect to Mexico's monetary policy, but even greater growth was quite possible. The central bank director added that 4% growth was insufficient to give a job to every Mexican seeking one, or to deal with the nation's enormous (46%) poverty.
July 31, 2012 - Mexican economy grew at more than double U.S. rate in second quarter
Aug. 23, 2011 - U.S. stands at the brink.
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