"Without sustained economic growth there will be no jobs, no way to fight poverty and no prosperity to share" - Mexican Finance Minister Luis Videgarary, August 2013
More than half of 2014 has come and gone, and all the official projections for economic growth in the current year just keep getting worse. Today Banixco (Bank of Mexico) director Agustín Carstens (left) - he's the equivalent of the U.S. Federal Reserve Chair - was forced yet again to reduce the central bank's prognosis for 2014 growth from the administration's original rosy prediction of 3.9%, to somewhere in the ill-defined range of 2.0-2.8%.
On May 21 Carstens said Mexican PIB - producto bruto interno, or gross domestic product (GDP) - expansion in 2014 would end up between 2.3% and 3.3%. More recalculation - all of it negative - is highly probable in the remaining five months of the current year.
Carstrens latest prediction comes perilously close to suggesting that Mexican Finance Minister Luis Videgary's official prognosis of 2.7% growth, delivered May 23 and not yet withdrawn, is unlikely to be reached. But like the U.S. Federal Reserve the Bank of Mexico enjoys political independence, and its pronouncements and policies are not beholden to any federal agency or official.
An excerpt from the central bank's official statement today:
"Despite the greater dynamism demonstrated by Mexico's economy in the second quarter of 2014, and the hope that the second half of the year might follow suit, very low growth in the first quarter of the year, coupled with a general perception of economic expansion considerably lower than previously anticipated, have required us to revise our estimates. Nor has consumer confidence in the economy been what we had hoped for."
In plain English, Banixco recognizes that expectations count for everything. Right now, few experts have much confidence in the course of Mexico's challenged economy, which is sputtering along far below growth levels already reached in many other Latin American nations facing equal or greater domestic challenges.
Carstens is not the only expert looking into the economic Crystal Ball. Many other consultants and financial institutions having been doing likewise since the first quarter of 2014, and none of them have liked what they saw. Read here about Mexico's worsening economic forecast for 2014. Merrill Lynch: weak U.S. demand, domestic insecurity will continue to challenge Mexican economy in 2014.
Mexico's economy grew a scant 1.1% last year. Mexico got a very poor 2013 economic report card.
Computed on an annualized basis, Mexican PIB grew 1.88% in the first quarter of 2014 and 1.56% in the second quarter, for a six month average of 1.7%, according to the National Statistical Institute.
Mexican economic growth since Jan. 1, 2013 has been "far beneath its potential" according to this Sept. 1, 2014 article in El Universal - and beneath official government predictions as well.
Mexican Finance Minister Luis Videgaray is by far the sharpest pencil in Peña Nieto's cabinet. An M.I.T. educated economist and draftsman of many of the nation's recent business and fiscal reforms, he continues promising that the country is about to turn the corner. But the boss may wonder, is it?
Aug. 29 - Proposal for minimum wage increase finds impetus in Mexico's Federal District
May 8 - Mexico says insecurity costs it $16.6 billion USD annually, and 50 lives a day
May 2 - Jalisco wage earners average $15 per day
Feb. 18 - Mexican economy continues to shed jobs
Jan. 5 - U.K. report: life is getting harder, not easier for Mexicans
Dec. 20 - Mexican minimum wage in 2014 will be $5 dollars - a day
Dec. 7 - Sluggish labor market a victim of Mexico's economic backslide in 2013
Nov. 26 - Mexico's economic woes take a toll on Yucatán business
Oct. 8 - Wal-Mart sales in free fall a good barometer of a Mexican economy on the skids
Sept. 27 - Credit Suisse: storms will further reduce Mexican growth
Sept. 18 - Mexico is in full recession, say business executives
Aug. 31 - Bank of America Merrill Lynch: Mexico in huge economic hole; looming "risk of recession"
Aug. 24 - Mexican unemployment stats paint a bleak picture for the most well educated
Aug. 21 - Sluggish Mexican economy worries foreign investment experts
July 14 - Over 60% of Jaliscans earn less than subsistence income
Dec. 28 - Mexico pays enormous price for domestic insecurity
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