san antonio business and economics society old wine in new bottles? the mexican economy today jorge...
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San Antonio Business and Economics Society
Old Wine in New Bottles?Old Wine in New Bottles?The Mexican Economy TodayThe Mexican Economy Today
Jorge G. Gonzalez
Trinity University
Current Situation
• Rapid Economic Growth
Real GDP% Change
4.42
-6.17
5.156.76
4.813.65
-8-6-4-202468
1994 1995 1996 1997 1998 1999
Source: Banco de México www.banxico.org.mx
Current Situation
• Rapid Economic Growth
• Decline in Inflation Rate
Inflation Rate
7.05
51.97
27.7
15.7218.61
12.32
0
10
20
30
40
50
60
1994 1995 1996 1997 1998 1999
Source: Banco de México www.banxico.org.mx
Current Situation
• Rapid Economic Growth
• Decline in Inflation Rate
• Decline in Interest Rates
Interest Rates28-day CETES
0
20
40
60
80
J an-94
J an-95
J an-96
J an-97
J an-98
J an-99
J an-00
Source: Banco de México www.banxico.org.mx
Current Situation
• Rapid Economic Growth
• Decline in Inflation Rate
• Decline in Interest Rates
• Increase in Employment
Employment(Thousands of IMSS Members)
10000
11000
12000
13000
14000
15000
Jan
-94
Jan
-95
Jan
-96
Jan
-97
Jan
-98
Jan
-99
Jan
-00
Source: INEGI www.inegi.gob.mx
Current Situation
• Rapid Economic Growth
• Decline in Inflation Rate
• Decline in Interest Rates
• Increase in Employment
• Strong Peso
Exchange RatePesos per U.S. Dollar
456789
1011
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00
Source: Banco de México www.banxico.org.mx
Current Situation
• Rapid Economic Growth
• Decline in Inflation Rate
• Decline in Interest Rates
• Increase in Employment
• Strong Peso
• Strong International Sector
International Trade(Billions of Dollars)
94
- I
95
- I
96
- I
97
- I
98
- I
99
- I
10
20
30
40
Exports
Imports
Source: Banco de México www.banxico.org.mx
Can it get any better?
• Strong U.S. economy
• Price of oil
• Strong domestic demand
• Investment rating
A Tale of Two Years1994
• Zapatistas (January)• Car bombs (January)• Kidnappings (March)• Colosio (March)• Capital Flight• Large Trade Deficit• Controlled Peso
2000• Chiapas and UNAM• Strong DFI• Strong Floating Peso• Investment Rating
Future Dangers
Exogenous• International Crisis• Price of Oil• Increase in U.S. Rates• Recession in U.S.
Endogenous• Political Uncertainty• Loss of Discipline• Banking Sector• Balance of Payments
San Antonio Business and Economics Society
Old Wine in New Bottles?Old Wine in New Bottles?The Mexican Economy TodayThe Mexican Economy Today
Jorge G. Gonzalez
Trinity University