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National Economic Environment
Proposed Incentives in the 2016 Economic Package
Measures to encourage savings
• Elimination of the limit on deductions to income tax for voluntary contribution, additional
contribution for retirement, special savings accounts, and stock purchases from investing
companies.
• Repatriation of assets kept abroad: they should be invested as fixed assets from investing
companies or trusts, which should remain in the national territory for at least 3 years.
Measures to boost investment
•No tax deductions for investments on companies with incomes of up to 50 million pesos
(mainly, PYMES) in 2016.
• Encouragement of reinvestment on earnings. In 2017, one percent of distributed dividends.
• Promote formality. Tax sweepstakes, credit expansion to PYMES.
• Facilitate investment on electricity generation and renewable energies.
• Create new investment tools. Educational infrastructure bonds, FiberE, and project
investment certificates.
Economic Environment I Universidad Panamericana I
Macroeconomic Framework 2015-2016
Source: SHCP
Economic Environment I Universidad Panamericana I
Macroeconomic Framework 2015-2016
Source: SHCP
Economic Environment I Universidad Panamericana I
Economic Package 2015
Source: Centro de Estudios de las Finanzas Públicas, Cámara de Diputados
Economic Environment I Universidad Panamericana I
National Economic Environment
Special Tax on Production and Services (IEPS, in
Spanish)
compensates
for the
revenues
on the
general
VAT
IT IS MOVING FORWARD
FAST: IEPS
charged
on cigarettes,
alcohol,
energy
INEGI
and SHCPsignificantly.
booster drinks, junk food, and otherSources:
productos
increased
Non-oil sector
IEPS
Estimated VAT
collection from food
and medications.
Fuentes: INEGI and SHCP
Economic Environment I Universidad Panamericana I
National Economic Environment IEPS
compensates for the revenues on the general VAT
Fuentes: INEGI and SHCP
Non-oil sector IEPS
components
Cut tobacco
Energy boos drinks
Beer
Flavored drinks
High-calorie content
food
Other alcoholic beverages
Games and sweepstakes
Pesticides
Telecommunications
Fossil fuels
Economic Environment I Universidad Panamericana I
Investment rebounds and increases to 5
percent in 9 months
Fuentes: INEGI y SHCP
From the 57.303 million of pesos available for
Recovery has started
municipal public works at Ramo 23, just
• For the first time in six years, the productive
25,996 have been spent by the end of the
investment has increased at twice the economy.
third quarter, according to SHCP. The Majors
• During the third year of EPN’s management,
have not seized this year.
gross fixed investment spread.
Economic Environment I Universidad Panamericana I
National Economic Environment
Sensitivity of public income and expenditures
Source: SHCP
Economic Environment I Universidad Panamericana I
National Economic Environment
Conclusions
A positive economic growth higher than 2015 is expected in Mexico;
 Automotive exports to the US market are crucial for the economic growth
in Mexico;
 Inflation will remain controlled during 2016 and 2017;
 The interest rate will follow FED’s and will allow less pressure on the
exchange rate;
Variations on the interest rate will also affect public expenditures via
payment of the internal and external debt;
The fall in oil prices in 2015 does not seem to have impacted public
expenses, and it will not probably affect them in 2016 and 2017; but it will
be in 2018.
Economic Environment I Universidad Panamericana I
GDP Forecasts tor 2015, var. % yearly
SOURCE : OCDE
Economic Environment I Universidad Panamericana I
OECD reduces GDP forecasts for Mexico
Next year, Mexican economy will report growing rates higher than 3 percent.
OECD revised the present year estimation downwards.
Mexico’s GDP, var. % yearly, forecasts from 2015
Economic Environment I Universidad Panamericana I
GDP Forecasts and Inflation in Mexico
Source: IMF
Economic Environment I Universidad Panamericana I
GDP Forecast in Selected Countries
Source: IMF
GDP’s actual Growth Forecasts in Key American Economies in 2016
Pronostico de Crecimiento del PIB real en Economías Nacionales Destacadas en 2016
Annual
variation percentage
% Variación Anual
India
China
Indonesia
Malasia
Irlanda
Perú
Israel
Tailandia
Corea del sur
Suecia
Singapur
Australia
Estados unidos
Colombia
México
España
Chile
Nueva Zelanda
Reino unido
Dinamarca
Canadá
Alemania
Francia
Sudáfrica
Italia
Japón
Ecuador
Rusia
Argentina
Brasil
Venezuela
-.6
-.7
-1
-6
-8
.1
-6
-4
-2
0
1
3.8
3.3
3.3
3.2
3.2
3
2.9
2.9
2.8
2.8
2.5
2.5
2.5
2.4
2.2
2
1.7
1.6
1.5
1.3
1.3
2
4
4.5
6.3
5.1
6
7.5
8
Fuente: FMI
Economic Environment I Universidad Panamericana I
GDP FORECASTS
Source: IMF
Economic Environment I Universidad Panamericana I
GDP progress will be less in Mexico, but it is still
strong
Source: IMF
Economic Weakness Threatens Mexico
For the sixth consecutive time, the IMF reduced Mexico’s economic growth expectations
in a difficult global environment
GDP expectations in Mexico in 2016
Quarterly percentage var.
GDP expectations
Annual percentage var.
Economic Environment I Universidad Panamericana I
GDP progress will be less in Mexico, but it is still
strong
Source: IMF
Global GDP Forecasts
Economic Environment I Universidad Panamericana I
GDP Forecasts in Selected Countries
Source: IMF
GDP’s actual Growth Forecasts in Key American Economies in 2016
Pronostico de Crecimiento
PIB real en
Principales Economías de América
Annual del
variation
percentage
4
6
% Variación Anual
México
2
USA
Canadá
Chile
0
Venezuela
Argentina
Brasil
-2
Ecuador
Colombia
-6
-4
Perú
2016
2017
2018
2019
2020
Nota: Pronostico de Venezuela disponible hasta 2019
Fuente: FMI
Economic Environment I Universidad Panamericana I
GDP Forecasts in Selected Countries
Source: IMF
GDP’s actual Growth Forecasts in Key European Economies in 2016
Pronostico de Crecimiento del
PIB real
en Principales
Economías de Europa
Annual
variation
percentage
4
% Variación Anual
3
Alemania
UK
España
2
Italia
Francia
1
Irlanda
Suecia
Dinamarca
0
Israel
-1
Rusia
2016
2017
2018
2019
2020
Fuente: FMI
Economic Environment I Universidad Panamericana I
GDP Forecasts Slow Recovery
Source: The World Bank
The World Bank
reviewed the
global economic
growth
estimations
downwards in
2016, but it
fortecasts that
the activity will
regain its
dynamism in the
next years.
Economic Environment I Universidad Panamericana I
GDP Forecasts Slow Recovery
Source: The World Bank
Economic Environment I Universidad Panamericana I
SHCP’s Expectations for the Rest of 2016 and 2017
Source: SHCP (General pre-criteria of Economic Policy)
2016
2017
2.6 - 3.6
2.6 - 3.6
Tipo de cambio
17.5 pesos por dólar
17 pesos por dólar
Precio de la mezcla
25 dólares por barril
35 dólares por barril
2 millones 123 mil
barriles diarios
2 millones 28 barriles
diarios
-33 mil 68 millones de
pesos
-34 mil 430 millones de
pesos
3.0 %
3.0 %
PIB
Producción de petróleo
Cuenta corriente
Inflación
Where is it more affected?
The 20017 adjustment focusses on:
1. Actual projected expenditure will decrease by 4,2percent in 2017;
2. Financial expenditure will increase by 15,4 percent in real terms;
3. GDP will be lowered by 0,3 points, requeriments’ historical balance
Economic Environment I Universidad Panamericana I
Forecasts : Analysts’ Surveys
Source: Banxico, April 2016
Mexico: Private Sector Expectations on Interest Rate, Inflation, Real GDP, and Exchange Rate
(Percentage, pesos/dollar, Annual percentage variation)
Tasa de interés
Tipo de cambio
Interest rate
Inflación
Inflation
Exchange
rate
PIB
Gross
Domestic
Product
Economic Environment I Universidad Panamericana I
Report from SHCP’s Spokesperson
May 2 to 6 2016
Macroeconomic Outlook for Mexico
Economic Environment I Universidad Panamericana I
• According to Agustin Carstens:
• Mexico’s recovery will not come from abroad;
• US will not provide Mexico the required boost to grow; instead, it will come from structural
reforms, which will promote an increase in productivity and competitiveness;
•
Reforms will help to occupy a more prominent place abroad, and to stimulate de domestic market..
According to Jose Angel Gurria:
• Improving the rule of Law, justice, eradicating corruption, and increasing
transparency should be the second part of the structural reforms designed by Mexico.
• Mexico registers the lowest productivity levels from OCDE since it is 60 percent below
the countries’ average and 70 percent below the US. “And the problem is that these figures
are higher than ten years ago, that is, we are going backwards in regard to the productivity
gap, and, particularly with the US”.
Economic Environment I Universidad Panamericana I
• Agustín Carstens: “Although it experienced two situations that generated the crisis
in 1982, the rate increase and the fall of oil prices, the governor of the Mexican
Central Bank stated that a scenario of such proportions is unlikely.”
• Agustín Carstens: Having an independent central bank made the difference. The
“Ley de Presupuesto and Responsabilidad Hacendaria” and the change of the fixed
enchange system to fluctuation have allow the exchange rate to adjust without
undermining the inflation impact.”
• The 2016 to 2018 is a challenging period for Mexico and success will mostly depend
on how the implementation of the structural reforms (productivity and
competitiveness) are performed, and on our international commerce with the US.”
Economic Environment I Universidad Panamericana I
• From 2017, Mexican economy will perform better. Source: Alberto Jones, General
Director of Moody in Mexico.
• “Thinking on the possibility of a rating action to the raise or the low, or a positive or negative
perspective is unlikely because reforms, such as the electrical, are expected to bear fruit in
the medium term, maybe until 2018 or around 2020… We just witnessed a safe
estimation.”.
• “ That something affecting the ration may deteriorate is unlikely. Collection is higher.”
• “It is not Brazil’s time. It will be when that country regains order. It is clearly Mexico’s
moment. The High Canadian Pension Funds have just enter into partnership with ICA to
build; there are Afores with CKDes to invest on highways, and large funds are coming from
that country to invest in the power sector…
• Today, technological development , the establishment of a strong productive
foundation, innovation through patents, and productivity improvement are triggering
the economic development in a globalized environment.
Economic Environment I Universidad Panamericana I
Thank you
Economic Environment I Universidad Panamericana I