Macro Economics of Mexico Macro Economics of Mexico National and International Economic Analyses Group 2: Jetske Stortelder Kristian Zuur Joost van Bennekom BuCo-WTM-presentations November 11 th 2002

Overview Economic and industrial history Economic indicators International position Energy policy Conclusions WTM-presentations November 11th 2002 Group 2

Economic and industrial history Past – crisis 1930:Instable & ever changing economic policy 1930 – WOII:Economy improving measurements by govern. WOII – 1969:Further econ. develop. & upcoming tourism 1970: Oil crisis 1988: Fixing Peso-Dollar rate 1992: NAFTA 1994: Peso-crisis 1994 – present:Other FTAs & growing internat. dependence WTM-presentations November 11th 2002 Group 2

Economic indicators Gross Domestic Product Interest rates Unemployment Exchange rate Money supply Spending power Inflation WTM-presentations November 11th 2002 Group 2

Economic indicators: Gross Domestic Product GDP in 2001: US$ billions (The Netherlands in 2000: US$ billions) Strong decrease by peso-crisis by the end of 1994 After 1994: Rescue plan US & strong growth exports by NAFTA 1997: Asian crisis 1999: Recovering oil-price 2000: FTA with EU 2001: WTC-attack Forecast 2002 WTM-presentations November 11th 2002 Group 2

Economic indicators: Unemployment Reverse of GDP-trend Employment divided in sectors: agriculture 26%, industry 23%, services 51% Urban/rural urban unemployment higher better urban social security and employee benefits urban areas more dependent of economy Stable for last few years WTM-presentations November 11th 2002 Group 2

Economic indicators: Spending Power Mexican prices increased much more than US prices which caused an hugh increase when the peso was allowed to float free in 1994 Spending power = GDP / population = GDP per capita - Mexico: PPP US$ - The Netherlands: PPP US$ Unequal distribution: -20% of population earns 55% of income WTM-presentations November 11th 2002 Group 2

International position: FTAs NAFTA: North American Free Trade Agreement at end of 1993 with US & Canada Further lowering of tariffs on trade goods Aims: expand trade, boost economic growth, net increase in employment in all three countries Results in five years: doubled commerce between 3 countries, decreased unemployment, more foreign investors Disadvantages: environmental damage, widening of gap between rich and poor & export dependence on the US Since 2000: FTA with EU & other countries according to the NAFTA WTM-presentations November 11th 2002 Group 2

Energy policy Natural gas: intention to make this primary fuel Oil Abundant reserves, but bad infrastructure Monopoly by PEMEX over exploration and production 12% of 1994s export value Coal: only small part of energy production Electricity: Governmental dominion Mostly conventional thermal electricity production Only few nuclear or alternative non-polluting energy generation WTM-presentations November 11th 2002 Group 2

Conclusions Economic indicators very interdependent Good investors climate: –FTAs –Most stable economy of its region –Eased restrictions on foreign ownership Slightly changing energy-market Growing int. dependency, especially of US Good future prospects WTM-presentations November 11th 2002 Group 2

Statement 1 Mexico is too dependent on the US-economy. WTM-presentations November 11th 2002 Group 2

Statement 2 Mexico is a developing country. WTM-presentations November 11th 2002 Group 2