Guadalajara -
The Mexican Institute of Financial Executives (IMEF) has joined in the gloomy assessment of Mexico's struggling economy, predicting that growth in 2013 will be but a paltry 1.5%. Earlier this year IMEF estimated that the economy would expand a respectable 2.7%. But officials of the organization have significantly revised their forecast, noting that the country is "already in a recession."
IMEF, a nongovernmental organization, is composed of and speaks for financial managers, business consultants and economic experts in both the private and public sectors, according to its website.
On August 20 the secretary of Mexico's Hacienda y Crédito Publico said he anticipated 2013 growth of 1.8%, acknowledging that is "far below what Mexico needs." The agency is the nation's federal tax collection and budget planning office.
"Without sustained economic growth there will be no jobs, no way to fight poverty and no prosperity to share," added Hacienda secretary Luis Videgarary.
The next day the Latin American director of Moody's Investor Service expressed his concerns. He said Mexico's chronically anemic expansion raises serious questions about the national economy and its capacity for growth, both in the long and mid terms. Sluggish Mexican economy worries foreign investment experts.
Ten days later Bank of America Merrill Lynch endorsed that diagnosis, saying that Mexico is in an economic hole with a looming "risk of recession." Today's concurrence by IMEF paints yet a darker picture, at least for the remainder of 2013.
Despite early optimistic predictions from both the president and the chair of Banixco, Mexico's central bank, the economy here has tanked. Growth through June 30 was 1.25% - a third of the same period in 2012. Officials report that in the second quarter of 2013 gross domestic product, a measure of the entire national output of goods and services, fell 0.74% from the first. The internal revenue secretary attributes much of the problem to soft demand from the United States, Mexico's main trading partner. Many analysts contend Mexico remains far too dependent on American trade.
By contrast, the U.S. economy grew about 2.5% in the first semester of this year, far exceeding dire predictions offered by Mexico's central bank. Banxico chief: grim prognosis for U.S. economic growth.
Several Mexican publications, including this one, reported this week that pension funds of the largest government agencies are essentially bankrupt. They include the Mexican Social Security Institute (IMSS); the State Workers' Social Security Institute (ISSTE); PEMEX, the bureaucratically-bloated state petroleum company which is the subject of pending constitutional amendments designed to open it to private investment (an idea which enjoys widespread support among political moderates, but is rabidly opposed by the far Left and nationalist ideologues); and the CFE, Mexico's Federal Electricity Commission (another ferocious consumer of pesos paid out in pensions and benefits).
Sources say that the equivalent of 58.4% of Mexico's gross domestic product goes to social security, pensions and labor benefits. By way of reference, the country's 2012 GDP (producto interno bruto, or PIB here), was $1.758 trillion USD, the world's 11th largest. The same sources report that 77 cents of every peso in the federal 2014 budget will go to fund such obligations, with only 23 cents plowed back into long term capital investment. The government, in short, finds itself beholden to an enormous work force which no longer works.
Guadalajara, Independence Day 2013
Hurricane Ingrid has just battered Mexico's Gulf Coast, while Tropical Storm Manuel walloped the southwestern Pacific coast state of Guerrero, leaving catastrophic damage in its wake and parts of the Acapulco International Airport under water (as if the troubled resort needed any more problems in 2013). Federal and state assistance to both regions will cost many billions of pesos, and Manuel is now regrouping as a full blown hurricane to threaten the northwestern Pacific coast state of Sinaloa.
What can or will happen next to suffering Mexico is anybody's guess.
Nov. 4 - Mexico's State Workers' Social Security Institute (ISSTE) will devote 54% of its 2014 budget to the payment of pensions. The rest of its funding, which must be approved by the federal house of deputies, will pay for the medical needs of its members.
Economics and business
Oct. 20 - Baja Santander pronóstico de crecimiento para México
Oct. 8 - Wal-Mart sales in free fall a good barometer of a Mexican economy on the skids
Sept. 21 - "The fix is in" on energy reform, says AMLO
Sept. 20 - Without energy reform, Mexico will need more than half a century to reach U.S. output
Sept. 19 - Mexico's Left is determined to shackle the nation to the past
Aug. 24 - Mexican unemployment stats paint a bleak picture for the most well educated
July 29 - 53.3 million - that's how many Mexicans live in poverty
June 21 - Banixco raises storm flag warning on Mexican economy
June 12 - 59% of Mexicans remain trapped in underclass
Feb. 20 - World Bank: Mexico has 14th largest global economy, but its citizens rank 81st in food purchasing power
Pesos and dollars
June 12 - As peso continues its slide, Peña Nieto puts a trillion of them on the table
July 2 - Peso, dollar remain volatile; Banixco has $166 billion USD banked abroad
Acapulco's many storms
Apr. 26 - A bankrupt Acapulco can't meet its payroll
Feb. 6 - Acapulco's tearful mayor begs Peña Nieto for federal help
Feb. 6 - International press bombards Acapulco: "a death zone"
© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.
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