Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University International Business Forum
Recent Economic and Political Events World economic weakness World economic weakness Mexican government gridlock Mexican government gridlock Mexico – U.S. relationship Mexico – U.S. relationship Iraq war and aftermath Iraq war and aftermath
Mexico’s Reaction Peso’s debacle? Peso’s debacle?
Exchange Rate Pesos per U.S. Dollar Source: Banco de México
Exchange Rate Pesos per U.S. Dollar Source: Banco de México
Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight?
Foreign Direct Investment Billions of Dollars Source: Banco de México
Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight? Economic crisis? Economic crisis?
Real GDP % Change Source: Banco de México
Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight? Economic crisis? Economic crisis? Fiscal crisis? Fiscal crisis?
Government Balance Balance / GDP Source: SHCP
Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight? Economic crisis? Economic crisis? Fiscal crisis? Fiscal crisis? Inflationary spiral? Inflationary spiral?
Inflation Source: Banco de México
Term Risks Short Structural Challenges Risks and Challenges
Super Peso Super Peso
Inflation Differential vs. Exchange Rate Inflation Exchange Rate Source: Banco de México
Merchandise Trade Billions of Dollars Source: Banco de México Imports Exports
Why Super Peso? Foreign investment Foreign investment Family remittances Family remittances
Family Remittances Billions of Dollars Source: Banco de México
Super Heroes
Super Peso Super Peso U.S. economy U.S. economy Mexican politics Mexican politics Term Risks Short
China China Rule of law Rule of law Human capital Human capital Infrastructure Infrastructure Fiscal reform Fiscal reform Poverty Poverty Structural Challenges
A Tale of Two Surprises? Economic stability is not a surprise Economic stability is not a surprise Super Peso Super Peso June 17 th, 2002 June 17 th, 2002
Source: Proceso, June 23, 2002 Pg. 41
Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University International Business Forum
Mexico and the Super Peso A Tale of Two Surprises International Business Forum