Download Diapositiva 1 - Secretariat of Foreign Affairs

Secretaría de Hacienda y Crédito Público
Economic Outlook 2011
February 2011
Discipline in Public Finances
 Discipline in public finances has led to a moderate deficit and a declining
trend in public debt.
Public Sector Debt
(% of GDP)
General Gov. Financial Deficit 2010
(% of GDP)
Net Debt
12
36.0
10
35.2
35.1
35.0
8
HBPSBR
34.8
34.3
33.7
34.0
6
33.0
4
32.0
31.0
2
33.0
30.9
30.7
30.1
30.0
* Observed 2010
** Approved 2011
Source: SHCP, S&P (May 2010) for the rest.
Others Median
Ireland
Spain
Japan
Greece
Portugal
Rumania
Italy
BBB Median
India
Lithuania
South Africa
Hungary
Croatia
Tunisia
Russia
Bulgaria
Brazil
Peru
Mexico*
Mexico**
0
29.5
28.8
29.0
28.2
28.0
27.0
2010
Source: SHCP
2011
2012
2013
2014
2015
2
Tax Revenues
 There have been important efforts to substitute oil revenues and strengthen
public finances.
 Significant progress has been made in expanding the tax base and in
increasing tax revenues in recent years.
Non-Oil Tax Revenues
(% of GDP)
10.5
Number of Tax Payers
(millions)
10.36
10.0
34.1
35
10.00
9.96
38.9
40
31.3
9.52
9.5
28.9
30
9.34
25.0
25
8.96
9.0
20
16.8
8.57
8.36
15
13.8
Source: SAT
2010
2009
2008
2007
2006
2005
2011e
2010
2009
2008
2007
2006
2005
2004
Source: SHCP
2004
10
8.0
2003
8.5
29.6
3
Oil Production
 The oil production platform has stabilized in the last years.
 The oil price was hedged for 2011.
Oil Production
(thousand barrels per day)
2,500
Cantarell
Rest
2,000
1,500
1,000
500
2011e
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: PEMEX
4
Transactions in the U.S. Dollar Market
Debt Financing
Management
Domestic Debt
(pesos)
2005
External Debt
(dollars)
2010
8.0%
10.0
7.0%
9.0
6.0%
8.5
5.0%
8.0
4.0%
7.5
3.0%
7.0
2.0%
6.5
1.0%
6.0
0.0%
5.5
10
20
Maturity (years)
30
UMS
40
UMS
110
UMS
31
UMS 19
UMS 20
UMS 26
UMS 22
UMS15
UMS
14 N
UMS 19N
UMS 17
UMS
14
UMS
UMS 12
UMS 11
0
3
6
9
12
15
18
21
24
27
30
33
36
39
100
Yield (%)
9.5
Source: SHCP
UMS
34
Average Life in Years
Source: SHCP
5
Inflation and Interest Rates
 Even though inflation suffered a temporary increase at the end of last year
due to an increase in agricultural product prices, it remains below the crisis.
 Domestic interest rates are close to historical minimums, even with the
recent increase due to market uncertainty associated with the European
crisis and the events in Egypt.
Government Bonds
(%)
Inflation Forecast
(%)
Inflation 2010: 4.52%
5 years
10 years
20 years
30 years
12.0
11.0
2010
10.0
9.0
8.0
7.0
2011
6.0
Feb-11
Jun-10
Oct-09
Feb-09
Jun-08
Oct-07
Feb-07
Jun-06
Oct-05
Feb-05
Jun-04
Oct-03
Source: Banxico and SHCP
Feb-03
5.0
6
Sovereign Risk
 Mexico’s sovereign risk and the differential between long term domestic
and foreign rates are close their historical minimum.
Interest Spread Mexico and United States
(local rates on Government bonds, %)
EMBI Global
(basis points)
Argentina
Brazil
Mexico
5 years
Composite
10 years
30 years
200
3.0
100
2.5
Source: SHCP
Feb-11
3.5
Dec-10
300
Oct-10
4.0
Aug-10
400
Jun-10
4.5
Apr-10
500
Feb-10
5.0
Dec-09
600
Oct-09
5.5
Aug-09
700
Jun-09
6.0
Apr-09
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Source: JP Morgan
800
Feb-09
1000 7.0
900 6.5
2000
1800
1600
1400
1200
1000
800
600
400
200
0
7
Financial System
 With a capital level which is twice the regulatory minimum and a healthy
portfolio, development banks are positioned to continue contributing to the
expansion of bank credit to the productive and housing sectors.
Delinquency Rate and Capitalization Index
(%)
2006
nov-10
CAPI: Regulatory
Minimum%
4.5
DR
2.4
18.3
CAPI
17.3
0.0
2.0
Source: Banxico
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
8
Risk Management
 International reserves amount to 119.5 thousand million dollars (February
18, 2011).
 Additionally, Mexico requested the renewal of the Flexible Credit Line with
the IMF for two more years and 72 thousand million dollars.
International Reserves
(thousand million dollars)
120
 The
Mexican
government
contracted an oil price hedge for
2011.
115
110
105
100
 The
government
has
the
budgetary and financial capacity
to respond to natural disasters for
up to 50 thousand million pesos.
95
90
85
80
75
Source: Banxico
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
Feb-08
70
9
Deregulation and Simplification
Mexico is ranked as the best country to establish a business in Latin
America.
Ranking 2011 Doing Business
Singapore
The ranking measures the behavior in
183 countries of the following variables:
1
Mexico
35
Peru
36
Colombia
1.
2.
3.
4.
5.
6.
7.
8.
9.
39
Chile
43
Argentina
115
Brazil
Starting a business
Dealing with construction permits
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
127
0
50
Source: World Bank.
100
150
10
United States
 The United States economy is expected to accelerate during 2011. Expected
growth for GDP and industrial production is 3.1 and 4.2%.
 The new fiscal stimulus of 2.7% of GDP for 2011 implies upside opportunities
for United States growth.
GDP Growth Forecasts
(ann. quarterly growth %)
5.5
Industrial Production Growth Forecasts
(ann. quarterly growth, %)
9.5
5.0
8.5
4.5
IV-11*
III-11*
II-11*
I-11*
IV-10
III-10
II-10
I-10
1.5
IV-09
1.5
IV-11*
2.5
III-11*
2.0
II-11*
3.5
I-11*
2.5
IV-10
4.5
III-10
3.0
II-10
5.5
I-10
3.5
IV-09
6.5
III-09
4.0
III-09
7.5
Source: Blue Chip.
* Forecasts.
11
Europe
 The high deficit and debt situation in Europe continues to cause stress.
2011 Expected Public Deficit
(% of GDP)
2011 Expected Public Debt
(% of GDP)
120
12
110
10
100
90
8
80
70
6
60
4
50
40
2
30
0
Greece
Ireland
Italy
Belgium
Portugal
France
Austria
Spain
Germany
Netherlands
Mexico
Ireland
Greece
Spain
France
Portugal
Netherlands
Belgium
Italy
Austria
Germany
Mexico
Mexico*
20
*Without PEMEX investment.
Source: IMF and SHCP
Source: IMF and SHCP
12
Economic Growth
 Private sector growth forecast for 2011 have been revised upwards.
 Given the delay in the revisions, forecasts for 2011 do not consider the new
fiscal stimulus in the U.S.
 The income per capita is greater than other emerging economies.
PIB 2010
5.5 %
GDP per capita*
(thousand dollars)
20
15.8
16
14.3
11.3
12
Source: INEGI
PIB 2011
[4 - 5%]
7.5
8
4
3.3
0
India
China
Brazil
Mexico Russia
Source: SHCP
Source: IMF.
*Based on purchasing power parity (PPP).
** Observed 2010.
13
RecuperaciónDriver
Económica: Mercado Interno
Domestic
 Total private consumption has picked up significantly since the second
semester of 2009.
 Investment is gradually accelerating.
Gross Fixed Investment
(index, I 2007=100)
Private Consumption
(index, I 2007=100)
106
110
104
108
106
102
104
100
102
98
100
96
96
92
94
90
92
I 2007
II 2007
III 2007
IV 2007
I 2008
II 2008
III 2008
IV 2008
I 2009
II 2009
III 2009
IV 2009
I 2010
II 2010
III 2010
94
Source: INEGI.
I 2007
II 2007
III 2007
IV 2007
I 2008
II 2008
III 2008
IV 2008
I 2009
II 2009
III 2009
IV 2009
I 2010
II 2010
III 2010
98
Source: INEGI.
14
Recuperación Económica:
Domestic
Driver Mercado Interno
 The expansion in employment has continued, and all jobs lost during the
crisis have been recovered.
Employment
(monthly growth, 3m mov. avg., adjusted,
thousands)
Unemployment Rate, 2010
(%)
25
100
730,000 new jobs created in 2010
20.2
80
20
60
40
15
20
0
9.4
10
-20
8.6
-40
7.6 7.5 7.4 7.1
5.3 4.9
5
-60
-80
-100
Source: IMSS
Source: The Economist
Mexico
Brazil
Chile
Germany
Argentina
Canada
Italy
United
States
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
-120
Spain
0
15
Recuperación Económica:
Mercado Interno
Domestic
Driver
 The recovery of the domestic market is observed in the increasing trend of
retail sales.
95
95
Source: INEGI.
Dec-10
100
Jul-10
100
Mar-10
105
Nov-09
105
Jun-09
110
Feb-09
110
Oct-08
115
Jun-08
115
Jan-08
120
Sep-07
120
May-07
125
Jan-07
125
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
Wal-Mart Sales
ANTAD Sales
(index, jan-07 = 100, adjusted, 3m. moving avg.) (index, jan-07 = 100, adjusted, 3m. moving avg.)
Source: SHCP with information from Wal-Mart.
16
Fundamentales de
la Economía
Domestic
Driver
 From 2000 to 2006 average annual budgetary investment in infrastructure
was 3.5% of GDP, from 2007 to 2011 it will be 4.5% of GDP.
Investment Expenditure
2002 – 2011
(% of GDP)
Fostered Investment in Infrastructure
2000 – 2011
(2011 thousand million dollars)
4.8
4.8
4.8
4.3
4.1
45.0
41.0
3.9
50.0
3.1
3.5
3.5
4.0
3.6
4.5
4.0
5.0
51.9
55.0
5.5
40.0
3.0
2.5
35.0
2.0
* Approved 2011
Source: SHCP
2011e
2010
2009
2008
2007
2006
2005
2004
2003
2002
1.5
30.0
Average 2000-2006
* Approved 2011
Average 2007-2011
Source: SHCP
17
Domestic Driver
 The Mexican banking system is solid and since the second quarter of
2010 positive monthly growth in credit has been observed.
Commercial and Development Bank Credit to Private Sector
(monthly change, 3m. moving avg., %)
Total
Consumption
Housing
Firms
2
1
0
-1
-2
Source: Banxico
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
Jan-10
Dec-09
Nov-09
Oct-09
Sep-09
Aug-09
Jul-09
Jun-09
-3
18
External Driver
 Besides from the recovery associated with the global industrial cycle,
Mexican manufacturing will benefit from a more competitive exchange
rate.
Real Exchange Rate
(index, Jan-05=100)
China
Mexico
Hourly Wage in Manufacturing
(dollars)
China
Brazil
Mexico
2.5
130
120
13.8%
2.0
110
100
1.5
237.9%
90
1.0
80
70
0.5
Source: Central Banks.
2010 E
2009 E
2008
2007
2006
2005
2004
0.0
2003
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
Jan-05
Jun-05
50
2002
60
Source: International Labor Organization
19
External Driver
 Non-oil exports have increased since 1993 as a result of Mexico’s
comparative advantages.
 Non-oil exports have recovered from the recent crisis.
Non-Oil Exports
(monthly, adjusted, million dollars)
25,000
Mexico is the most competitive country
in auto parts manufacturing (KPMG).
One of every 7 cars circulating in the
U.S. is manufactured in Mexico.
20,000
15,000
The Mexican aerospace industry
occupies the first place in
manufacturing investment in the world
(Deloitte).
10,000
5,000
Mexico is the biggest producer of smart
phones in the world and the second
greatest exporter of television sets.
Source: Banxico
Dec-10
Dec-08
Dec-06
Dec-04
Dec-02
Dec-00
Dec-98
Dec-96
Dec-94
Dec-92
0
20
Concluding Remarks
• 2011 will be a second year with a solid economic
growth.
• Balanced growth between the export sector and the
domestic market.
• The soundness of the development banking system
and the active participation of commercial banks
contributed to the recovery of construction and
housing finance in 2010.
• In 2011, Government policies will focus on green
and sustainable housing as well as reducing the
housing deficit.
21
Human Development
 The living standards of the Mexican population have improved.
 The Human Development Index measures education, health and per capita
income.
Human Development Index
0.80
Chile, 0.78
0.75
Mexico, 0.75
Russia, 0.72
Brasil, 0.70
China, 0.66
0.70
HDI
0.65
0.60
0.55
India, 0.52
0.50
0.45
0.40
1990
1995
2000
2005
2006
2007
2008
2009
2010
Source: United Nations Development Program (UNDP)
22