Mexico’s Economy –
A Quick Overview
Input to the Conference
„Union Coordination in the Automobile Industry –
Building Briges“
Mexico City
September 30th - October 3rd, 2013
Zirahuén Villamar, FES Mexico
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
1
Mexico: A Big Economy,
an Unbalanced Society
Household and
Personal Income (2010)
GDP Size (2012)
•
A Middle-Class Nation?
Class
Houseohold
% of total
People
Upper
Middle
Low
•
Source: World Bank http://databank.worldbank.org/data/download/GDP.pdf
March
2011 2013
September
… not so actually.
Source: National Institute of Geography and Statistics (INEGI)
http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/Boletines/Boletin/Comunica
dos/Especiales/2013/junio/comunica6.pdf
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
2
Economic Performance –
The Quest for Stability and...
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After a traumatic and volatile 80s decade, a new culture of economic stability
Big national efforts to gain external credibility in order to set foundations for
economic activities within the North American integration process
Reforms for the new Mexican economy
NAFTA enters into force in January 1st 1994
Greater role of market forces and private actors, lesser for State policies and
public players and interventions
A big opening to World economy: goods, services and finances
Credibility meant stability:
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Inflation (Single aim, autonomous Central Bank)
Public finances (Zero deficit)
Exchange rate (rather free flotation)
Financial crisis in 1995 (Tequila effect), with further effects on the real
economy the following years
A decoupling national economy: those sectors and activities (few regions and
players as well) linked to the NAFTA and those (most of regions and population)
not in the NAFTA orbit
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
3
Economic Performance – … the Unwanted
but Logical Result: Low Growth
Rationale
2008-2013
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After the second trauma of 1995 crisis,
the culture of stability and equilibria was
reinforced
Further reforms in public finances,
monetary fundamentals and more free
trade agreements
In order to fulfill such goals, little or none
chances for economic public policies
were left
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When the crisis arose, there were no
countercyclical meassures available
In 2009 Mexico got the worst GDP
performance in Latin America
The recovery has been weak
Updated forecasts are getting more and
more pessimistic for the upcoming years
Results
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Mediocre GDP growth, quite below
potential calculations
Real 30-year-average: 2% growth
Exchange rate benefits exports of
particular goods and lots of imports, but it
doesn’t foster the internal market
Source: Organization for Economic Co-operation and Development (OECD)
http://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economicsurveys-mexico-2013_eco_surveys-mex-2013-en#page16
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
4
Poverty – A Vulnerabilities Approach
Multimensional,
2012 Data
Deprivations
Education
Health Services
Social Security
Quality and Spaces of the Dwelling
Basic Household Services
Access to food
Results
45.5% of population living in poverty
(53.3 mill)
Modererately poor: 37.7% of population,
income under $180 usd / month (urban)
or $115 usd /month (rural) (41.8 mill)
Extremely poor: 9.8% of population,
income under $86 usd /month (urban) or
$62 usd / month (rural) (11.5mill)
Source: National Council for the Evaluation of Social Development Policy (CONEVAL)
http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/Boletines/Boletin/Comunicados/Especiales/2013/junio/c
omunica6.pdf
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
5
Labour – Not a Matter of Unemployment…
Unemployment rate
People at work
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Structural unemployment is below 6%
Even during the worst year of the crisis
(2009), this number was the peak
Latest data (August 2013) shows a 4.78%
Total population: 118 mill. (ca.)
Economically Active Population: 52 mill. (ca.)
Working population: 49 mill. (ca.)
Source: National Institute of Geography and Statistics (INEGI)
http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/boletines/boletin/Comuni
cados/Especiales/2012/Diciembre/comunica3.pdf
March
2011 2013
September
Source: El Economista, September 20th, 2013
http://eleconomista.com.mx/industrias/2013/09/20/desempleo-cede-su-menor-nivelseis-meses
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
6
Labour – …but of Informal Employment
Informal Employment
• Around 60% of employment is informal: 29 mill.
• Much of the employment growth has been in informal jobs
• It means people (workers and their families) with no social
protection
• Low added-value sectors/activities
• Many workers are self-employed
• Geographical characteristics: Informal Employment is
concentrated in Southern and Center States
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
7
Productivity
Working a lot…
What
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People in Mexico work 2,250 hours a year, more
than the OECD average of 1,776 hours.
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29% of employees work very long hours, much more
than the OECD average of 9%
Why
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Low salaries force people to find another job to
compensate their incomes
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High number and hours of unpaid activities to be
performed
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Low productivity economic activities (informal sector)
…because of low Productivity
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As a whole, Mexico has the lowest Labour Productivity
among OECD countries
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Total Factor Productivity, has actually decreased nearly
10% compared to 1991
In some particular fields, Productivity is similar to other
economies
This national differences underline the disparities, whether
geographical or by income
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•
Source: Organization for Economic Co-operation and Development (OECD)
http://www.oecdbetterlifeindex.org/countries/mexico/ and
http://dx.doi.org/10.1787/888932708674
March
2011 2013
September
Source: Organization for Economic Co-operation and Development (OECD)
http://dx.doi.org/10.1787/888932706546
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
8
Low and Stagnated Productivity
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In the last decade, the national average Labour Productivity has decreased
Ups and downs are due to the economic cycle: all in all, they are recoveries to
certain levels but not true growth
A significant part for low growth of GDP lies on this reason
Labour Productivity Index
GDP Index
Working Population Index
Source: National Institute of Geography and Statistics (INEGI) http://www.stps.gob.mx/bp/secciones/conoce/areas_atencion/areas_atencion/web/productividad/Aspectos.pdf
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
9
Labour costs
Features
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In order to attract foreign investments and
to foster local competitiviness Mexican
labor costs have constantly decreased
compared to those of other emerging
industrial countries competitors (vr.gr.
China and Brazil)
•
This trend has its origins not only in
diminishing Mexican costs by itself
(flexibilization of the labour market
regulation) but also in the improvements
of other countries’ salaries
Effects
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Little or inexistent options for an internal
market driven economic growth
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A robust race to the bottom behavior
Source: Organization for Economic Co-operation and Development (OECD)
http://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economicsurveys-mexico-2013_eco_surveys-mex-2013-en#page16
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
10
The Reforms
The new Government (2012-2018) and the Pact for Mexico
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Great expectations
Political, economical and social agreement among main Political Parties
Reforms
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Labour Law (2012, before new Government took office)
Education (passed on August 2013)
Finances and Banking (passed on September 2013)
Energy (Oil and Electricity) (being disscussed now)
Fiscal (being discussed now)
Programmes
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Cruzade against Hunger (Ministries and Agencies co-ordination)
Democratization of Productivity (National Development Plan’s Goal)
Formalizing Employment Programme (part of the Fiscal Reform)
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
11
Thank you!
 [email protected]
March
2011 2013
September
Friedrich-Ebert-Stiftung
– AG– Mexico
QUIZ
Friedrich-Ebert-Stiftung
12