1. MEXICO| Further forecast revisions1
2
The Organisation for Economic Coordination and Development (OECD)3
published a revised forecast for Mexico’s economy on 28 November,4
downgrading its predictions for GDP growth. It predicts that growth for 20165
will be 2.2%, down from the 2.6% predicted in June, whilst for 2017 it has6
revised its forecast from 3% down to 2.3%. In 2018, it predicts growth at 2.4%.7
The envisaged fall in growth is attributed to economic uncertainty after Donald8
Trump’s victory in the US elections, the fall in oil prices as well as government9
cuts to expenditure to help meet its deficit reduction aims. There is higher10
demand from the US, but protectionist policies from Trump could harm this.11
Furthermore, the growth in imports and exports is predicted to slow somewhat.12
13
The OECD praised Mexico’s economy for rebuffing the worst a troubled14
international scene can throw at it, with other external threats highlighted being15
less external investment in its energy sector as well as a dramatic fall in the value16
of the peso since Trump’s victory. Growth will be driven by high internal17
demand, caused by structural reforms that have depressed prices, with electricity18
being an example. Other positives include growing credit worthiness, a rise in19
real salaries and remissions back from the US, though these could be under20
threat. Unemployment in the economically active population fell to 3.7% this21
year from 4.6% in 2015. However, this may rise to 4.1% next year. Consumer22
spending has risen by 2.8% this year, and will grow 2.4% in 2017.23
24
Despite some praise for the Mexican government’s work in shoring up the25
economy, the OECD nevertheless presented recommendations for the26
government. Amongst these were the furthering of structural reforms to27
encourage consumer spending and growth in the labour market, especially28
amongst women, as well as reinforcing of a crumbling judiciary. Fighting29
corruption is highlighted as one of the key issues facing President Enrique Peña30
Nieto. Furthermore, the OECD report states that Mexico must do more to battle31
income inequality and extreme poverty in the country, as well as in encouraging32
better business practices amongst employers.33
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Sidebar: On 24 November, Mexican baking giant Bimbo inaugurated a plant in35
Argentina after a US$33m investment. The plant will employ around 200 people,36
and is part of a plan to expand Bimbo’s leadership of the global baking market,37
according to its director general and CEO, Daniel Servitje.38
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CHILE| Pension rise announced41
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On 28 November in Huechuraba, Santiago province, the Chilean President43
Michelle Bachelet, alongside her Ministers for Social Development and of Work44

2. and Social Provision, Marcos Barraza and Alejandra Krauss, announced that45
from 1 January 2017 the basic rate of old age pension provision would rise by46
10% for all citizens who qualify for the scheme. Stating that there were now47
more people in Chile who also lived longer, Bachelet asserted that pension48
reform was critical to maintain social security. The 10% rise will see the monthly49
amount received by some 1,357,000 pensioners go from US$93.54 to50
US$102.90, an amount that requires an extra C$135bn (US$200.68m) to be spent51
on pensions by the government. Furthermore, the method of calculating52
contributions will be fixed to ensure that people do not begin to receive less than53
they put in. Stating that it was a “priority” of her government to ensure people54
can live out old age “with dignity”, Bachelet highlighted other reforms in social55
provision enacted by her government. For example, in 2014 the Pharmacy Fund56
was created which provides 5m Chileans with chronic illness free medication, as57
well as exemptions from payment of medical care for 300,000 pensioners.58
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PARAGUAY| Minimum wage rises61
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On 29 November, the President of Paraguay Horacio Cartes signed into law a63
7.7% raise in the minimum wage for private sector workers, which will come64
into force almost immediately on 1 December 2016. Acknowledging the “valid65
arguments” of trade unions that wages have not reflected a growing economy in66
recent years and a rise in the cost of living of around 7% since the last minimum67
wage rise in March 2014, the government has enacted a new wage rise to help68
workers. The rise will see the monthly minimum wage rise from P$1,824,05569
(US$312.08) to P$1,964,507 (US$336.10). Other provisions in the law passed70
state that the minimum wage will be evaluated every June, with the wage being71
adjusted according to inflation rates recorded each year in that month. However,72
if inflation rises above 10% or there are exceptional economic disturbances, then73
this will be suspended and replaced by measures deemed appropriate during any74
such situation. The government will work with the National Council of75
Minimum Wages (Conasam) and the Works Administrative Authority, who must76
submit any recommendations to the government concerning the minimum wage77
by 30 June each year.78