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Economy
& statistics
With two maritime coastlines, one on the Atlantic
facing Europe and the other on the Pacific facing
Asia, Mexico has developed the most dynamic trade
volume in Latin America, with a turnover of 340
billion dollars in 2000.
Mexico has really profited from its membership of
NAFTA (North American Free Trade Agreement) which
it joined in 1994. This commercial treaty gave the
country the opening on the rest of the world that
it was looking for, following the process to
liberalize trade which had been started in 1985.
The result of belonging to NAFTA has been a
comfortable growth, sheltered from the extreme
movements which usually affect emerging markets. It
has made economic modernization possible.
Mexico has also signed trade agreements with Chile,
Columbia, Venezuela, Bolivia, Costa Rica,
Guatemala, Honduras, Salvador and Nicaragua, and a
partial agreement with Brazil. The European Union
and Mexico have signed a similar treaty to that of
NAFTA which came into effect on 1st July 2000,
preparing the opening of economic borders by
progressively and reciprocally eliminating customs
tarifs and other barriers. An identical treaty has
been signed between Mexico and Israel.
The country has important natural resources, has
largely developed its manufacturing industry and
diversified its external trade. The different state
sectors of the economy have been privatized one
after the other, except for the public company
Petroleos Mexicanos (Pemex) which earns the federal
government nearly a third of its revenue. Mexico is
the fifth biggest petrol producer in the world and
the price of petrol has tripled since it fell to
its lowest level in March 1999.
Thanks to the financial aid it received in 1995,
the short term debt has been reduced and the
country has managed to honour its external
committments. In August 2000 Mexico reimbursed the
IMF the last instalment of the the loans it
received which saved it in 1995, ahead of the date
of payment. Having recovered from its financial
problems so swiftly, Mexico has been able to show
investors that it is quite apart from the other
major Latin American countries. There is an
enormous amount of foreign investment in the
country : 13 billion dollars in direct foreign
investment.
2000 was a very good year with an growth rate far
above the initial forecast and the highest recorded
for nineteen years. Unemployment fell to its lowest
ever. Workers who paid for the 1995 crisis
(salaries dropped 25% in real value) and the
recovery, have finally seen their purchasing power
increase.
Within the NAFTA terms, the United States and
Canada abolished 80% of the taxes on all Mexican
products, except petrol. Mexico abolished 41% of
the taxes on Canadian exports and 43% on American
exports. At present external trade represents 60%
of the GDP and no longer only depends on petrol
revenue, which has dropped to 7% of the total
export revenue. Mexico has become an exporter of
manufactured goods (84% of the exports) and an
importer of semi-finished products (75% of the
imports). There is a growth in the exportation of
chemical products, electronic equipment, electrical
and computer products, automobiles and spare parts.
It has become the main supplier of textiles and
electronics to the United States and its third
biggest supplier of cars.
Political life has become democratic, but strong
social tensions persist. The income per capita is
around
4,388 dollars (1998), but the distribution is very
unequal. The minimum wage is 3 dollars a day, but
19.4% of the working population earn less than
that, while 32% earn from two to five times this
amount and can buy secondary goods. Disparities are
greater in the southern states and social tensions
have developed, as shown by the flare up of
violence which caused several victims in Chiapas in
June 2000. In the northern states, the drug traffic
has increased in the shadow of the economic
revival.
The President has undertaken to make good on these
regional and social disparities. In the southern
states the main part of the infrastructure has
still to be built and as the Mexican State does not
have the means to do it alone, interesting
perspectives should be opening for both Mexican and
foreign investors.
The banking sector remains one of the main weak
points of the Mexican economy, particularly because
of the lack of its capitalization and the mediocre
quality of its assets. The State should finance the
recapitalization of the banks hit by the 1995
crisis and also reform the pension schemes. To be
able to increase its expenditure on education,
health and programmes to help eliminate povery, the
government will absolutely have to make fiscal
reforms (which for the moment only account for 11%
of the GDP).
Main
Economic Indicators
|
|
1997
|
1998
|
1999
|
2000
|
|
economic growth
(%)
|
6.8
|
4.8
|
3.7
|
6.5
|
|
inflation
(%)
|
15.7
|
18.6
|
12.3
|
8.8
|
|
public balance/GDP
(%)
|
-0.7
|
-1.2
|
1.1
|
0
|
|
unemployment
(%)
|
3.7
|
3.2
|
2.5
|
2.0
|
|
exports (billions
$)
|
110.4
|
117.5
|
136.7
|
161.2
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|
imports (billions
$)
|
109.8
|
125.4
|
142.1
|
173.6
|
|
balance of trade
(billions $)
|
0.6
|
-7.9
|
-5.4
|
-12.4
|
|
current balance
(billions $)
|
-7.4
|
-16.0
|
-14.0
|
-21.3
|
|
external debt
(billions $)
|
152.3
|
163.7
|
169.7
|
178.4
|
|
debt charges/exports
(%)
|
21.3
|
23.3
|
20.9
|
17.3
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General
information
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Gross
National Product 1999
|
438.84
billion $
|
|
GNP
per capita
|
4500
dollars
|
|
Purchasing
power parity (PPP)
|
7600
dollars
|
|
GNP
growth 1990-1997
|
+0.2%
per capita per annum
|
|
Households
with PPP +$30000pa
|
2
730 000 = 12%
|
|
Households
with PPP +$15000pa
|
9
700 000 = 43%
|
|
Households
with PPP -$5000 pa
|
3
870 000 = 17%
|
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Aid
1998
|
7.849
billion $
|
|
Foreign
investment
|
13
billion $
|
|
Tourist
revenue 1999
|
8.2
billion $
|
(sources : MOCI, le
Monde, le nouvel Observateur)
Agriculture
23% of the working population are employed in this
sector which contributes 4.9% of the
GNP.
Mexican agriculture exports
its coffee, sugar and cotton. Foodcrops, dominated
by maize, still play a determining social role,
particularly in the under-industrialized southern
regions. The global share of agriculture in the
national economy is however marginal compared to
industry.
Agriculture
(in millions of tons, head, m³ for timber)
|
Production
|
1996
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1997
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1998
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1999
|
|
wheat
|
3.375
|
3.657
|
3.232
|
3.178
|
|
wood
|
21.962
|
22.991
|
23.866
|
-
|
|
cocoa
|
0.039
|
0.046
|
0.044
|
0.037
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coffee
|
0.374
|
0.368
|
0.306
|
0.303
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|
sugar
cane
|
45.081
|
45.22
|
48.895
|
46.000
|
|
cotton
|
0.268
|
0.021
|
0.024
|
-
|
|
maize
|
18.024
|
11.656
|
18.476
|
18.492
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oranges
|
3.985
|
3.944
|
3.329
|
3.538
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barley
|
0.586
|
0.471
|
0.497
|
0.497
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potatoes
|
1.282
|
1.317
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1.281
|
1.503
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rice
|
0.394
|
0.469
|
0.458
|
0.399
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|
wine
|
0.133
|
0,152
|
0,136
|
0.135
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cattle
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29.301
|
30.772
|
30.500
|
30.293
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sheep
|
6.183
|
5.987
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5.999
|
5.900
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pigs
|
15.405
|
15.735
|
14.994
|
13.855
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fishing
|
1.495
|
1.529
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-
|
-
|
(sources : MOCI, le
Monde, le nouvel Observateur)
Industries
& mining
The Mexican industrial sector is linked to that of
the United States. Most Mexican industries are
sub-contractors : maquiladoras.
The most dynamic sectors are
building and the manufacturing industry,
particularly electronic equipment and metallurgical
products. The main exports, apart from petrol, are
cars, electrical and electronic material and
equipment.
Thanks to NAFTA the country
has been able to modernize its industry very
rapidly. It attracts investment in sectors with a
low added value, like electronic assembling and
textiles : the Chinese Republic is planning to make
its biggest foreign industrial investment in Mexico
with 100 million dollars for a textile factory with
sights on the the American and Canadian
markets.
In the automobile sector,
General Motors, Chrysler, Volkswagen, Nissan and
Ford are present, Ford is even planning an
expansion. An even if it is assembling which is at
present the main industry, local companies dealing
in automobile equipment are developing.
Rapid growth is expected in
the coming years in port activities, airport and
rail developement, telecommunications by satellite,
long distance telephone, the distribution of
natural gas, electricity production, secondary
petro-chemical sectors and the management of water
resources.
The railway network, out of date and known for its
slowness, is now managed by the private sector. In
the airline sector, the process of privatizing 35
airports started in 1998. Only Mexico City airport
has not yet been privatized, but the question will
probably come up when the government has chosen the
site on which to build a second airport, which has
become totally necessary.
Port management has also been accorded by
concession to port administrators who can be
controlled 49% by foreign investors and some port
services can even be controlled 100%.
On a national level, 85% of goods still circulate
by road.
Mining
(in millions of tons, except natural gas in
billions of m3, gold and silver in tons)
|
Production
|
1996
|
1997
|
1998
|
1999
|
|
silver
|
2528
|
2679
|
2686
|
2700
|
|
copper
|
0.325
|
0.299
|
0.384
|
0.378
|
|
iron
|
6.204
|
6.264
|
6.336
|
7.171
|
|
natural
gas
|
31.0
|
33.3
|
35.8
|
37.0
|
|
lignite
|
10,3
|
10,3
|
11,0
|
11.0
|
|
gold
|
22
|
24
|
29
|
28
|
|
petrol
|
160.4
|
169.0
|
170.8
|
162.6
|
|
phosphate
|
0.682
|
0.700
|
0.770
|
0.636
|
|
lead
|
0.167
|
0.148
|
0.152
|
0.147
|
|
zinc
|
0.349
|
0.357
|
0.372
|
0.356
|
|
gas
reserves
|
1810
|
1797
|
1555
|
1322
|
|
petrol
reserves
|
6592
|
6504
|
5512
|
4913
|
Mining is well developed,
Mexico is rich in minerals, both in diversity and
quantity. The most important mineral extracted is
silver, from famous silver mines like the Minera
Real de Angeles . The returns are very satisfactory
and the country is the leading world producer. A
great quantity is extracted, making 20% of the
world production.
Nowadays Mexico is even
investing in the United States : in October 1999
the Grupo Mexico bought up the American mining
company Asarco for over 2 billion
dollars.
Petrol exploitation is also
done on a large scale. The production in 1999 which
was 162.6 million tons, made the country the 5th
biggest producer in world. The monopoly of this
industry (in its production and sales) is held by a
State company, Pemex : the Petroleos Mexicanos. The
monopoly is however being constantly reduced for
petro-chemicals.
In March 2000 a project for a
salt factory in Lower California which was menacing
the local ecosystem was finally abandonned by the
Mexican government and the Japanese group
Mitsubishi : this is an all time first for a
country which up until then eagerly welcomed any
kind of investment.
(sources : MOCI, le Monde, le
nouvel Observateur)
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