Media Home
UN Web TV
UN Audiovisual Library
UN PhotoIMF / MEXICO
Download
There is no media available to download.
Share
STORY: IMF / MEXICO
TRT: 2:35
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH/NATS
DATELINE: 16 NOVEMBER 2015, WASHINGTON, DC, USA/RECENT
RECENT/WASHINGTON, DC, USA
1. Wide shot, International Monetary Fund Headquarters (IMF)
2. Close-up, International Monetary Fund (IMF) logo
16 NOVEMBER 2015, WASHINGTON, DC, USA
3. SOUNDBITE (English) Dora Iakova, Mission Chief to Mexico, International Monetary Fund (IMF):
“Mexico’s economy has weathered several severe external shocks over the past year. First, oil prices collapsed, they fell more than 60 percent over the last year. At the same time global financial volatility increased, affecting particularly emerging markets. Despite these severe shocks, economic activity in Mexico has continued to grow at a moderate pace, inflation has been low and yields on Peso denominated bonds have been relatively stable. We expect the economy to grow around 2-1/4 percent this year and reach 2.5 percent next year.”
RECENT/MEXICO CITY, MEXICO
4. Grocer packing vegetables
16 NOVEMBER 2015, WASHINGTON, DC, USA
5. SOUNDBITE (English) Dora Iakova, Mission Chief to Mexico, International Monetary Fund (IMF):
“Mexico is doing structural reforms in a number of areas, including energy, telecommunications, education, competition and the financial sector. And we all have already seen some positive benefits from the reforms. For example, we have seen increased private investment in gas pipelines, in telecommunications and in electricity generation. The financial sector reform has helped spur competition in the banking sector and brought increased credit growth. Looking forward we expect that the reforms will increase potential growth in the medium term to between 3 and 3.5 percent.”
RECENT/MEXICO CITY, MEXICO
6. Man pumping gas
16 NOVEMBER 2015, WASHINGTON, DC, USA
7. SOUNDBITE (English) Dora Iakova, Mission Chief to Mexico, International Monetary Fund (IMF):
“Mexico has been at the forefront of emerging markets in setting clear goals to reduce carbon emissions and in putting in place policies to protect the environment. The authorities have eliminated fuel subsidies over the last few years. Starting next year, they plan to liberalize domestic prices of fuel gradually, while at the same time setting fuel taxes which are consistent, or take into account, that damage to the environment and the health consequences associated with fossil fuel use.”
RECENT/MEXICO CITY, MEXICO
8. Pedestrians on Paseo de la Reforma
16 NOVEMBER 2015, WASHINGTON, DC, USA
9. SOUNDBITE (English) Dora Iakova, Mission Chief to Mexico, International Monetary Fund (IMF):
“Mexico faces the challenge of bringing banking services to the wider population, while at the same time safeguarding financial stability. And to achieve this they need to maintain strong supervision and regulation of the financial sector, as well as closely monitor risks more generally, to ensure a healthy pace of credit growth.”
RECENT/WASHINGTON, DC, USA
10. Close-up, International Monetary Fund (IMF) logo
In its annual assessment of the Mexican economy, the International Monetary Fund (IMF) said that Mexico’s economy continues to grow at a moderate pace, despite an array of external challenges, including a collapse in oil prices and heightened volatility in international financial markets.
Dora Iakova, the International Monetary Fund’s (IMF) Mission Chief to Mexico said on Monday (16 Nov) that “Mexico’s economy has weathered several severe external shocks over the past year. First, oil prices collapsed, they fell more than 60 percent over the last year. At the same time global financial volatility increased, affecting particularly emerging markets. Despite these severe shocks, economic activity in Mexico has continued to grow at a moderate pace, inflation has been low and yields on Peso denominated bonds have been relatively stable. We expect the economy to grow around 2 -1/4 percent this year and reach 2.5 percent next year.”
Economic activity has remained resilient despite the difficult external environment. Growth is expected to reach 2.2 percent in 2015, and accelerate to 2.5 percent in 2016, thanks to stronger exports to the United States and robust domestic demand. The unemployment rate fell to a post-crisis low of 4¼ percent in the second half of 2015.
The rise in global financial volatility and a portfolio shift away from emerging markets caused a sharp depreciation of the peso vis-à-vis the U.S. dollar over the past year. Nonetheless, inflation remains low, and the yields on domestic currency bonds have been relatively stable.
As a highly open economy, with high participation of foreign investors in the domestic bond market, Mexico remains exposed to external shocks. However, the positive growth outlook and strong economic policies increase its resilience and ability to withstand financial market stress. Mexico’s growth prospects are very favourable: the implementation of far-reaching structural reforms is expected to lift potential growth to 3-3½ percent over the medium term.
“Mexico is doing structural reforms in a number of areas, including energy, telecommunications, education, competition and the financial sector. And we all have already seen some positive benefits from the reforms. For example, we have seen increased private investment in gas pipelines, in telecommunications and in electricity generation. The financial sector reform has helped spur competition in the banking sector and brought increased credit growth. Looking forward we expect that the reforms will increase potential growth in the medium term to between 3 and 3.5 percent,” Iakova said.
Mexico has been at the forefront of emerging markets in setting clear commitments to reduce carbon emissions and implementing policies to protect the environment. The authorities eliminated fuel subsidies in recent years. Starting in 2016, they plan to gradually liberalize domestic fuel prices, while fixing fuel taxes at a level which reflect the negative environmental, health, and congestion effects of fossil fuel use. From a fiscal perspective, fixing the gasoline and diesel excises would help stabilize tax revenues.
“Mexico has been at the forefront of emerging markets in setting clear goals to reduce carbon emissions and putting in place policies to protect the environment. The authorities have eliminated fuel subsidies over the last few years. Starting next year, they plan to liberalize domestic prices of fuel gradually, while at the same time setting fuel taxes which are consistent, or take into account, that damage to the environment and the health consequences associated with fossil fuel use,” Iakova said
Mexico’s banks are well capitalized, liquid, and profitable. Commercial banks maintain capital adequacy ratios well in excess of regulatory requirements. The banking system is funded primarily by domestic deposits, which reduces vulnerability to external liquidity shocks. The IMF report presents analysis which suggests that the balance sheets of corporations are also overall sound, and would be resilient to further changes in the exchange rate or funding rates.
Mexico has relatively low credit to the private sector as a share of GDP compared with other emerging markets, although credit has been growing at a steady pace in recent years. This is due to a number of factors, including a large informal sector, difficulties with collateral repossession, and a history of banking crisis in the 1980’s and 1990’s. Mexico therefore faces the challenge of fostering financial deepening while safeguarding financial stability. The recently implemented financial reform aims to address some of the structural impediments to credit growth by enhancing reporting requirements to credit bureaus, simplifying the transfers of mortgage loans and personal accounts among banks, and strengthening consumer protection.
The IMF Mission Chief to Mexico added that, “Mexico faces the challenge of bringing banking services to the wider population, while at the same time safeguarding financial stability. And to achieve this they need to maintain strong supervision and regulation of the financial sector, as well as closely monitoring risks more generally, to ensure a healthy pace of credit growth.”
