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Country Forecast Mexico

  • ID: 2138647
  • Country Profile
  • August 2016
  • Region: Mexico
  • 48 Pages
  • The Economist Intelligence Unit
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Background: Between 1929 and 2000, Mexico was governed by the Partido Revolucionario Institucional (PRI), a party that has shifted from its nationalist and interventionist origins towards free-market policies and economic liberalisation. The presidential victory in 2000 of the centre-right Partido Acción Nacional marked a transition to democratic pluralism, but political effectiveness was hindered by a divided legislature and slow progress on structural reforms. Sluggish growth and soaring violent crime contributed to the PRI returning to power under Enrique Peña Nieto in December 2012.

Political structure: The political system is presidential, bicameral and federal (31 states plus a federal district covering the capital, Mexico City). Presidential terms are six years, without possibility of re-election. Under the transition to democratic pluralism, the centre of political power has shifted away from the executive towards the legislature and local governments. A recent political reform lifted a ban on re-election for legislators and mayors, allowed independent candidates, and created a single electoral institute with greater oversight over state and local elections, which are often marred by irregularities.

Policy issues: Orthodox fiscal and monetary policies underpin macroeconomic stability, but dependency on oil-related revenue (around one-third of the budget until recently, falling to around 13% in 2016) limits countercyclical measures. The pace of reform has accelerated markedly under Mr Peña Nieto, with the adoption of transformative structural reforms approved in 2013-14, including in the energy, education and telecommunications sectors. Constraints on long-term growth include a lack of competition in the internal market and a deficient education system, as well as persistent institutional flaws resulting in rampant corruption across all levels of government and limited progress in curbing high levels of crime.
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Country Forecast Mexico

Mexico--highlights: Political outlook

Mexico--highlights: Demographic outlook

Mexico--highlights: Business environment outlook

Mexico--highlights: Economic outlook

Mexico--highlights: Market opportunities

Mexico--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability

Political outlook: Political and institutional effectiveness

Political outlook: Election watch

Political outlook: Key players to watch
Enrique Peña Nieto
Luis Videgaray Caso
Andrés Manuel López Obrador
Jaime Rodríguez
Margarita Zavala

Political outlook: International relations

Demographic assumptions
Mexico will need to capitalise on its demographic dividend
A persistently high poverty rate affects purchasing power
Migration to the US, while falling since the last decade, remains high

Business environment outlook: Business environment rankings
Structural reforms could help improve the business environment

Business environment outlook: Mexico's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
The labour market

Business environment outlook: Macroeconomic environment
Institutional drawbacks will act as a major drag to growth

Business environment outlook: Policy towards private enterprise and competition
New regulators will be hard pressed to address issues of competition

Business environment outlook: Policy towards foreign investment
Despite low oil prices, energy reform appears to be on track

Business environment outlook: Foreign trade and exchange controls

Business environment outlook: Taxes
Although it has raised tax revenue, fiscal reform has proved unpopular

Business environment outlook: Financing
New technology will help to improve low levels of financial inclusion

Business environment outlook: The labour market

Business environment outlook: Infrastructure

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends
Low oil prices affect the energy sector, despite a relatively successful reform

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in Mexico
Stocks and flows
Origin and distribution

Market opportunities: Market outlook
Large consumer market offset by high income disparities
Trade openness and proximity to the US are some of the country's key assets

Market opportunities: Consumer expenditure
Raising consumer credit opens up more opportunities

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model
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