*Updated Apr. 7*
Guadalajara -
On his first trip abroad as Mexico's new president, Enrique Peña Nieto delivered an optimist economic prognosis for his nation in the year ahead, predicting growth could reach 4%. He said it would likely be considerably higher before his term ends in 2018.
That number is almost certainly much better than the United States will post in 2013. (Jan. 11 - Banxico chief: grim prognosis for U.S. economic growth).
Peña Nieto is in Santiago, Chile, attending a regional summit sponsored by the United Nations Economic Commission for Latin America and the Caribbean (CEPAL). CEPAL was established as a U.N. agency in 1948. It now has 44 member states, including 20 in Latin America and 13 in the Caribbean.
During a forum with business leaders from Mexico, Chile, Peru and Colombia, president Peña Nieto pointed out that Mexico's economy is stable and has a low rate of inflation, which he attributed in large part to its manageable debt relative to productivity. Independent statistics confirm the claim.
Six months ago, Mexico's Hacienda reported that as of June 30 the nation's debt was a mere 34% of GDP. The debt to GDP (Gross Domestic Product) ratio is a critical benchmark in determining the economic health of any country. Experts say the higher the number the worse off the country, as its economic engine grinds to a halt. By way of comparison, the U.S. debt to GDP ratio is now well over 100%. America's ever-increasing debt - about $16 trillion dollars - exceeds the annual value of goods produced and services delivered by the national economy ($15+ trillion).
Last May, former president Felipe Calderón told a conference of American businessmen in Mexico City that fiscal discipline coupled with a low debt to GDP ratio had enabled Mexico to weather the world-wide financial crisis better than many nations. Peña Nieto repeated that theme today.
"This scenario, without a doubt, offers Mexico an enormous potential for growth, and we want to take full advantage of it," said the new PRI chief executive. "We want to grow the economy in an equitable manner, which allows for significant development throughout the country. To that end, our focus will be on spreading prosperity while extending economic opportunities even to the remotest corners of the country. Our government wants to be a great facilitator of investment in Mexico."
But in a clear reference to the country's yet raging drug war, which shows not the slightest sign of abating, Peña Nieto added, "We want to create greater legal confidence in investing in Mexico."
(Jan. 7 - Peña Nieto: no option but to follow Calderón drug war strategy).
President Peña Nieto is himself investing much political capital in aggressive economic strategies, targeting the country's endemic poverty (Mexico's impoverished grew by more than 11% in two years - 13 million citizens in extremis). Earlier this week he participated in the launching of an anti-hunger campaign in desperately poor Oaxaca state, where hundreds of thousands don't earn enough to adequately feed themselves. In a nation of 112 million, where 46% live in some degree of poverty, the strategy is at least as critical as those he'll have to implement against Mexico's dozens of drug cartels (Enrique Peña Nieto's biggest challenges will be economy and environment, not drug cartels).
In comments to CEPAL, Peña Nieto acknowledged that "grave security issues" still confront many areas of Mexico. "But the best way to confront them, apart from excellent policing actions, is to create jobs and promote economic development," he said. No one in Mexico will dispute that.
Jan. 30 - Mexico's Secretaría de Hacienda y Crédito Público - a federal agency equivalent to the U.S. Internal Revenue Service, Office of Management and Budget and Congressional Budget Office rolled into one - delivered a better than expected year end report for 2012 today. The country's economy grew exactly 4% last year, comfortably exceeding the projected 3.5%. The rate of inflation was 3.7%.
Mar. 25 - Mexico's economy grew 3.24% in January, the National Institute of Statistics reported today, well on track to a projected annual expansion of 4% in 2013. That's quite likely to beat U.S. growth this year.
Apr. 7 - Leaving China today, president Peña Nieto predicted that Mexico's economy could grow at a rate of five to six percent during his term, quickly placing it in the world's top 10 economies (it's # 14 now). He said it all depended on proper "structural reforms," offering greater legal certainty to potential investors and emphasizing the importance of quality education. And of course, establishing a state based upon the rule of law - a buzzword for ending the ravages of the 76 month old drug war.
Jan. 28 - Mexican peso "well anchored," says central bank director
Jan. 3 - Mexican governors raise their salaries, while almost half the nation remains in poverty
Jan. 1 - Mexican stock market beat U.S., London, Brasil in 2012
Dec. 31 - Dollar falls unexpectedly against Mexican peso as U.S. goes over fiscal cliff
Dec. 30 - Mexico's drug war, by the numbers
Nov. 16 - Gross economic disparity still a hard fact of Mexican life
Nov. 11 - Seven of 10 Mexican households report food shortages
Oct. 17 - Ending poverty key focus of incoming PRI government
July 31 - Mexican economy grew at more than double the U.S. rate in second quarter of 2012
EPN's arrival in Santiago de Chile
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