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Economic report
February 2007
(Figure 1)
I.
Real GDP growth, quarterly
REAL SECTOR
(Annual percent change)
• The Mexican economy grew 4.8% in 2006
Mexico’s Gross Domestic Product (GDP)
grew 4.3% in the last quarter of 2006. During
2006 real GDP grew 4.8%. Seasonally
adjusted rates showed that GDP rose 0.47%
in the fourth quarter of 2006 with respect to
the previous quarter. (INEGI)
• Industrial production expanded at a solid
pace in 2006
Industrial production increased 1.6% annual
in December 2006. In 2006 industrial
production was 5% higher than its level of
2005. In December 2006 the manufacturing
output rose 0.9%, construction 4.3% and
utilities 5.7%, mining decreased 3.1%, all at
annual rates. Seasonally adjusted rates
displayed a decline in industrial production
of 0.47% in December from November.
(INEGI)
• Unemployment rate rose slightly during the
last quarter of 2006
Unemployment rate reached 3.6% during
the fourth quarter of 2006, a higher level
compared to the 3.1% of the last quarter of
2005. Seasonally adjusted rates displayed a
rise of 0.47% in the last quarter of 2006 with
respect
to
previous
quarter.
The
Economically Active Population was 44.4
millions in the fourth quarter of 2006,
approximately 59% of the 14 years and over
population; 96.4% had a job, and from this
group 26.6% was working in the informal
sector. (INEGI)
Source: INEGI
(Figure 2)
Industrial production
(Annual percent change, 6-month moving average)
Source: INEGI
(Figure 3)
Unemployment rate
(Percentage of Economically Active Population)
Source: INEGI
(Figure 4)
Total workers in the IMSS
(Annual percent change, 2006-2007)
• The employment rose in January 2007
The number of permanent and eventual
urban workers affiliated to the Public Social
Security Institution (IMSS) increased by 1,433
at January 31, 2007, to reach 13,967,001.
Between January 31, 2006 and January 31,
2007 total employment increased by
865,595, an increase of 6.6%. (STPS)
Source: STPS
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Economic report
February 2007
(Figure 5)
Retail Trade
• Wholesale and retail sales increased
during January 2007
The wholesales, employment and real
average earnings increased 3.1%, 0.5% and
2.4%, in that order, from December 2005 to
December 2006. Retail sales, employment,
and real average earnings rose 1.3%, 2.6%
and 2.7%, respectively, in December 2006
with respect to the same period of 2005.
II. FINANCIAL SECTOR
December of each year
(Annual percent change)
Source: INEGI
(Figure 6)
• The consumer price index rose in January
2007
The inflation reached 0.52% in January 2007,
according to the Mexican Central Bank. The
annual inflation in January was 3.98%, 0.07%
lower than in January 2006. Core inflation
and no-core inflation reached 0.50% and
0.54% in January 2007. In annual terms these
price indexes rose 3.89% and 4.17%,
respectively. (Banxico)
Annual Inflation
(Annual percent change, CPI, core inflation and no-core-inflation)
Source: Banxico
(Figure 7)
• The interest rate of Mexican Treasury Bills
(Cetes) 28 days were unchanged
The Mexican Treasury Bills yields (Cetes
yields) with maturity of 28 and 91 days were
unchanged in the February 20, 2007 primary
market auction. The 171 days Cetes yield
rose 1 point, to attain 7.27 percent. The 3
years Government Bond interest rate fell 23
base points, to reach 7.47%. (Banxico)
Primary market auction: Cetes 28 days
Weekly auctions
Source: Banxico
(Figure 8)
Exchange rate peso/dollar
2006-2007
• The exchange rate displayed a slightly rise
The Mexican peso exchange rate reached
11.05 pesos per dollar (ppd) in February 23,
reflecting a 5.53 cents increase from the
previous Friday level. During 2007 the
exchange rate has averaged 10.96 ppd,
displaying a depreciation of 24.47 cents.
(Infosel)
Source: Infosel
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Economic report
February 2007
(Figure 9)
Country risk
• Mexico’s country risk showed a slightly
increase
Mexico’s country risk, measure by J.P.
Morgan’s EMBI+ Index, increased 2 base
points (bp) in February 23 with respect to the
previous week, reaching 105 bp. On the
other hand, Argentina’s country risk
declined 2 pb, reaching 208 bp, and Brazil’s
country risk fell 2 bp to locate at 180 pb. (JP
Morgan e Infosel)
• International reserves grew
Mexico’s international reserves grew by 435
million dollars (md) in February 23, 2007 with
respect to their level at February 9, 2007,
reaching
68,650
md.
During
2007
international reserves have raised 970 md.
(Banxico)
• The Mexican stock market displays a
growing path
The Mexican Stock Market Index (IPyC) rose
0.05 percent in February 23, reaching
28,505.72 points. The IPyC showed a
cumulative profit of 7.78% in Mexican pesos
and 5.55% in US dollars with respect to the
end of 2006. (BMV)
2006-2007
Source: EMBI+, J.P. Morgan e Infosel
(Figure 10)
International Reserves
At the end of each year, Billions of Dollars
Source: Banxico
(Figure 11)
Mexican Stock Market Index
Points
III. EXTERNAL SECTOR
• Narrow deficit of trade balance during
January 2007
The trade balance deficit reached 1,709
million dollars (md) in January 2007. The
trade deficit was driven by a fall in motor
vehicle exports, and a narrowing surplus in
the petroleum trade balance. Total exports
attained 18,989 md, 1.1% lower than in
January 2006. Non-oil exports increased 43%,
and oil exports decreased 25.7%. Imports
rose 11.8%, to reach 20,698 md. Consumer
goods imports increased 23.3%, capital
goods imports raised 11% and intermediate
goods imports augmented 9.9%.
Source: BMV
(Figure 12)
Trade Balance
January of each Year (million dollars)
Source: INEGI
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Economic report
February 2007
(Figure 13)
Foreign Direct Investment
Billions of Dollars
• The FDI flows decreased modestly in 2006
The Foreign Direct Investment (FDI) attracted
by Mexico reached 18,938 md in 2006, 3.6%
lower than the level observed in 2005.
(Banxico)
• The current account balance registered a
small deficit in 2006
The current account balance displayed a
deficit of 1,475 md in 2006, 0.2% of GDP. This
figure was below the percentage registered
in 2005 (0.6% of GDP). This small deficit was
the result of an increase of the petroleum
trade surplus and inflows received by
Mexican workers abroad (remittances).
Banxico
• Workers’ remittances increased in 2006
Remittances from Mexican workers in other
countries (mainly U.S.A.) reached 1,758 md
in December 2006, 0.1% higher than the
flows registered in December 2005.
Remittances reached 23,054 md in 2006, an
annual increase of 15.1%. The number of
transactions in December 2006 was 5.3
millions, 1% higher than the level recorded in
December 2005. The average amount in
each transaction was 334.5 dollars.
(Banxico)
• Oil prices increase
The price of the Mexican oil mix was 48.98
dollars per barrel (dpb) at February 23,
increasing 2.81% from the level of February
16; the futures for April for West Texas
Intermediate (WTI) and Brent in the
derivatives market were 61.14 and 60.88
dpb, respectively, raising 2.95% and 5.02%
from the February 16 figures. During 2007 the
price of Mexican oil mix reached a
cumulative variation of 0.66% and an
average level of 45.19 dpb. (Pemex and
Infosel).
Source: Banxico
(Figure 14)
Current Account Balance
Source: Banxico
(Figure 15)
Remittances
December of each year
Millions of Dollars
Source: Banxico
(Figure 16)
Oli Prices
Dollars per barrel, 2006-2007
Source: Pemex and Infosel
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Economic report
February 2007
IV. OUTLOOK
• A lower inflation in 2007 is expected
Banamex-Citigroup.- According to the Outlook Survey of Financial Markets Analysts, the inflation
at the end of 2007 could reach 3.67%, (higher than their previous forecasts of 3.54%). However, in
the last survey the inflation forecast was 3.7%. The core inflation in 2007 will be 3.55%, this level is
lower than the 3.59% surveyed in the previous month.
• The US economy will grow near 3.1% in 2007
Banamex-Citigroup.- The Federal Reserve (FED) projects a US GDP growth between 2.5% and 3%
in 2007 and among 2.75% and 3% in 2008. Banamex-Citigroup projections are higher than these
figures: 3.1% in 2007 and 3.3% in 2008.
• US Federal Funds rate will reach 5% by the end of 2008
Banamex-Citigroup.- The federal funds interest rate could reach 5% by the end of 2008, driven by
an expected higher economic growth. In this year, the odds of keeping without change the
federal funds interest rate is growing, even tough there is a chance that the rate could decrease
from 5.25% to 5% by the end of the third quarter.
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