BPPG response - Options for Defined Benefit schemes - 19Apr24.pdf
Mexico español-r
1. Mexico
May 2016
A Nation of Contrast and Opportunity
Key Facts for Understanding the Country and Discussing its Future
2. STABLE ECONOMY
CONSUMPTION
CAPACITY
MIDDLE
CLASS
PROXIMITY TO USA
INFLATION
HAPPINESS
SKILLED
WORKFORCE
ARCHEOLOGY
TOURISM
GEOPOLITICAL
POSITION
INSECURITY
POLITICS
DRUGS
POVERTY
TECHNOLOGY
USE
LACK OF GROWTH
LACK OF
COMPETITIVENESS
VIOLENCE
INFRASTRUCTURE
CORRUPTION
EDUCATION QUALITY
RULE OF LAW
FINANCIAL
INCLUSIONCULTURE
Productivity NAFTA
ENTREPRENEURSHIP
EXPORTS
INTERNATIONAL
RESERVES
NATURE GASTRONOMY
CONNECTIVITY
MEXICO’S STRENGTHS
and room for improvement
1
12
15
12
12
1213
17
18
16
16
22
6
3
25 22
25
5
23
24
10
7
8
7 1717
17
9
17
3. World Estimated GDP, 2050(2)
(Trillions of dollars)
Countries with Largest GDP in 2014(1)
(Trillions of dollars)
RankCountry $USD
USA
China
Japan
Germany
UK
France
Brazil
Italy
Mexico
1
2
3
4
5
6
7
8
#15
17.4
10.4
4.6
3.9
2.9
2.8
2.3
2.1
1.3
1Source: (1) IMCO 2013, World Bank 2014. (2) ProMéxico with information from Bloomberg and The Economist.
MEXICO IS THE WORLD’S 15 LARGEST ECONOMY
it is estimated it could become #8 by 2050
#8
China
USA
India
Indonesia
Germany
Brazil
Mexico
UK
France
Japan
105.9
70.9
63.8
15.4
11.4
11.3
10.3
9.8
9.7
9.8
TH
4. 20072005 2009 2011 2013 2015
MEXICO’S COMPETITIVE POSITION HAS NOT IMPROVED SINCE 2005
largely due to low productivity and lack of rule of law
International Competitiveness Index (1)
(2015)
Competitiveness Index by Specific Indicator (2)
2Source: (1) Índice de Competitividad Internacional 2015, IMCO. (2) World Competitiveness Index 2015-2016 from the World Economic Forum.
32
3736 36 36 IMCO
58 58
52
61
55 WEF57
Market
size
Business
sophistication
Technological
advance
Financial market
development
Labor market
efficiency
Innovation
Institutions
Infrastructure
Macroeconomic
environment
Health and
primary education
Advanced education
and training
Property market
efficiency
3.3
4.9
5.7
4.0
4.23.84.2
3.8
5.7
3.4
59
50
73
46
114
82
11
109
59
56
71
86
4.2
4.2
Ranking Score
5. MANY STATES IN MEXICO ENJOY COMPETITIVENESS AND GROWTH
but performance levels are unequal by state given different business environments, poverty levels, security and regulatory frameworks
3Source: (1) México cómo Vamos, 2015. (2) Secretaría de Hacienda y Crédito Público, 2015.
Competitiveness Index by State
(2014) (1)
AVERAGE
Economic Growth by State(2)
(Percentage growth of GDP, 2014) (2)
States with growth below
the national level
States with
higher-than-national,
and higher-than-2013
growth levels
States with
higher-than-national,
but lower-than-2013
growth levels
AGS
QRO
COAH
NL
GTO
JAL
CHIH
TAMS
BC
CAMP
TLAX
DGO
GRO
QROO
BCS
COL
CDMX
NAY
SIN
TAB
ZAC
PUE
SLP
SON
MEX
CHIS
MICH
YUC
HGO
MOR
OAX
VER
95
90
75 75
70 70
65 65
60 60
55
50 50 50
45 45 45
40 40 40 40
35 35
30
25
20 20 20
10 10
5 5
Mexico
City
-1.6%
1.6%
-1.6%
0.3%
0%1.3%
-1.6%
1.6%1%
9.8%
6.3%
4.9%6.2% 1.2%
-0.5%
0.7%
2.5%
2%
1.8%
5.5%
4.4%
2.3%
8.8%
5%
6.3%
1.6%
5.7%
0.1%
2.7%
-5.2%
1%
1.4%
BC
CHIH
DGO
BCS
SIN
SON
AGS
COAH
NL
JAL
TAMS
NAY
ZAC
SLP
CAMP
GRO
MÉX
HGO
QROO
TAB
PUE
CHIS
YUC
OAX
VER
TLA
COL
MOR
QROGTO
MICH
6. AGS
QRO
COAH
NL
GTO
JAL
CHIH
TAMS
BC
CAMP
TLA
DGO
GRO
QROO
BCS
COL
NAY
SIN
TAB
ZAC
PUE
SLP
SON
MÉX
CHIS
MICH
YUC
HGO
MOR
OAX
VER
CDMX
STATE ECONOMIC COMPLEXITY IS VERY IRREGULAR
some states are comparable to Uganda (Chiapas) and others to Hong Kong (Nuevo León)
Source: The Atlas of Economic Complexity and the Mexican Atlas of Economic Complexity, Harvard 2014.
4
Economic Complexity Index by State
(2014)
Economic Complexity Index
(International comparative, 2014)
From 25 to 50
From 0 to 25
From 50 to 75
From 75 to 100
Higer Complexity
Italy
Hong Kong
Uganda
Angola
Chiapas
Nuevo León
Baja California Norte
Japan1.0
0.8
0.6
0.4
0.2
0.0
Guanajuato Panama
7. THERE IS POTENTIAL TO BETTER POSITION MEXICAN CITIES
only two Mexican cities are ranked in the regional top 5
Source: americaeconomia.com, 2015.
5
Best Five Cities, by Indicator (according to the Urban Competitiveness Index)
(2015)
Brand
power 100.0
Environmental
sustainability
Human capital and
knowledge economy
Infrastructure
& connectivity
Executive
services
Corporate
services
Miami
100.0
Miami
100.0
Santiago
94.5
San José
100.0
Miami
100.0
Miami
97.2
Buenos Aires
73.3
São Paulo
97.3
São Paulo
93.2
Barranquilla
63.1
São Paulo
76.9
Mexico City
96.1
São Paulo
63.6
Mexico City
97.1
Buenos Aires
93.0
Cali
62.8
Mexico City
74.1
Bogotá
94.4
Santiago
53.7
Bogotá
89.2
Miami
93.0
Cartagena
61.9
Bogotá
74.1
Cali
94.4
Bogotá
53.2
Panama City
87.7
Mexico City
92.5
Panama City
59.1
Panama City
72.5
Monterrey
Economic framework
& dynamism
Political &
social framework 100.0
Santiago
100.0
Miami
99.9
Miami
89.5
Santiago
99.5
Valparaíso - V.del Mar
82.8
Mexico City
98.5
Concepción-Talcahuano
80.9
Panama City
95.2
Montevideo
76.7
São Paulo
8. MEXICO IS THE 11 MOST POPULATED COUNTRY
but 53% of 120 million Mexicans live beneath the poverty line
Social Deprivation Indicators in Mexico
(Percentage of total population in 2014) (1)
Per-Capita Income Distribution by Decile in Mexico
(In thousands of pesos, monthly average, INEGI 2014) (2) (3)
6Source: (1) Coneval, 2015. (2) INEGI. Encuesta Nacional de Ingresos y Gastos de los Hogares, ENIGH 2014. Basic tabulations 2015. (3) Data from SAT, 2016.
50% of the
Mexican population
has a monthly income
below 2 thousand
pesos
Forbes’ Top Five
Mexican Businessmen
hold 9% of GDP
without
social security
59%
without access
to health services
21%
without basic
utilities at home
18%
without access
to quality housing
12%19%
subject to insufficient
education
without access
to nutrition
23%
I II
$0.6 $1.0 $1.3 $1.6 $2.0 $2.4 $2.9
$3.7
$5.3
$13.7
III IV V VI VII VIII IX X
TH
See more here...
9. Mexico Population
(% of distribution by age, 2000 vs. 2030) (1)
Working Population
(% change, 2010 vs. 2035) (2)
Working
Population
MEXICO IS A YOUNG COUNTRY WITH A GROWING WORKING POPULATION
generating production sustainability and consumption within the country
Source: (1) INEGI, Censo de Población y Vivienda 2010, Conapo, Proyeciones de la población en México 2005-2010. (2) UN Population Division 2011, Economist Intelligence Unit.
7
-40% 40%20%-20% 0%10% 10%8% 8%6% 6%4% 4%2% 2%
85ormore
Ages
80 to 84
75 to 79
70 to 74
65 to 69
60 to 64
55 to 59
50 to 54
45 to 49
40 to 44
35 to 39
30 to 34
25 to 29
20 to 24
15 to 19
10 to 14
5 to 9
0 to 4
0 0
India
Mexico
Brazil
USA
Spain
China
Japan
UK
36.5%
14.3%
26.4%
8.7%
3.7%
-2.2%
-6.3%
-19.0%
2000 2030
World Happiness Index, see more here...
10. 8
Consumer Spending Share, Emerging Economies
(Percentage of GDP, 2015) (2)
THE MIDDLE CLASS HAS REGISTERED SIGNIFICANT GAINS SINCE 2011
in addition to strong purchasing power
Source: (1)PEWResearchCenter,2011.(2)ProMéxicowithinformationfromtheBrazilianInstituteofGeographyandStatistics.InstitutoNacionaldeEstadisticaGeográfiaeInformatica.CentralStatisticalOrganization,India.BadanPusaatStatistic.ChinaNationalBureuofStadisticsHarverAnalytics.
LATAM Middle-Class Growth
(As a percentage of total population, 2012) (1)
Ecuador
Colombia
Bolivia
Peru
Argentina
Mexico
Brazil
Paraguay
Venezuela
Chile
Uruguay
2001 2011
8
11 21
13 19
14 25
14 32
17 26
18 28
20 27
20 30
25 34
30 33
21
IndiaChina Colombia Brazil MexicoIndonesia
36.5%
56.6% 59.3% 61.2%
62.5% 67.3%
11. Student population
9Source: (1) Índice de Competitividad Internacional 2015, IMCO. (2) Prueba PISA.
PISA Test Ranking
(2014) (2)
RANKING
1
2
3
4
5
36
53
SHANGHAI
SINGAPORE
HONG KONG
TAIPEI
SOUTH KOREA
OCDE AVERAGE
USA
MEXICO
613
573
561
560
554
494
481
413
REGION SCORE
THERE ARE 36 MILLION STUDENTS IN MEXICO
however, only 2% graduate from college and according to PISA, Mexico is ranked #53 in global education quality
100
99.4Primary school 14.6M
Middle school 6.3M 42.9
27.4
2.2
High school 4.0M
3.0MUniversity
Student Attrition Rates by Grade
(2013-2014. Base 100)(1)
12. MEXICO IS THE 8 LEADING COUNTRY AT PRODUCING ENGINEERS
and is ranked 16th by number of worldwide-ranked universities
Graduating Engineers, by Country
(Thousands, 2015) (1)
Ranked Universities by Country
(2015)(2)
10Source: (1) World Economic Forum 2015/UNESCO Institute for Statistics. (2) Social Progress Index, 2015.
#16Mexico
181
74
46 44 44
38 36 33
26 24 22 21 19 16 14 13 13
USA
UK
China
Japan
France
Germany
Italy
Austria
Canada
SouthKorea
Brazil
Russia
Spain
Argentina
India
Netherlands
Total engineersPer-Capita
3.2
3.0
3.0
2.9
1.6
1.3
1.1
0.9
0.7
0.6
Russia
USA
Iran
Japan
Vietnam
Indonesia
Ukraine
#8 Mexico
France
South Korea
454
238
234
168
100
148
140
130
114
105
TH
13. IT Professionals Supply Evolution
(Number of IT professionals, 2002-2014)
THE SUPPLY OF INFORMATION TECHNOLOGY PROFESSIONALS IS GOOD
6 out of 10 certified PSP* developers are Mexican
11Source: ProMéxico with information from Carnegie Mellon University 2015 *Personal Software Process.
889
693
507
371
IT professionals Software developers
578
436
347
257
2002 2006 2010 2014
14. IT Professionals Supply Evolution
(Number of IT professionals, 2002-2014)
THE SUPPLY OF INFORMATION TECHNOLOGY PROFESSIONALS IS GOOD
6 out of 10 certified PSP* developers are Mexican
11Source: ProMéxico with information from Carnegie Mellon University 2015 *Personal Software Process.
889
693
507
371
IT professionals Software developers
578
436
347
257
2002 2006 2010 2014
15. MEXICO ENJOYS AN ENVIABLE GEOPOLITICAL AND ECONOMIC POSITION
natural resources, strategic location plus solid economic and business climate
12Source: Social Progress Index, eia.gov, Pemex, Análisis SWS / Ignia, 2016.
Free trade
agreements
Commercial
infrastructure
Solid resources
13.4Bnbarrelsofoil,ranked#17worldwide
$177BnUSD ininternationalresources
117ports,16.7Kkmrailroad,
378.9Kkmhighway,
58internationalairports
12with49countries
NAFTAisworth$20.5TrUSD,26%GlobalGDP
GDP$1.26BnUSD
withaworkingpopulationof47M
Spending power
ExportsurpluswithUSA
worthover$100BnUSD
28xgrowthoverpast20years
Exporting power
Next door to the world’s
#1 economy: USA
GDP:$19TrUSD/320Minhabitants
460Mbordercrossingsyearly
16. 13
MEXICO HAS BECOME AN IMPORTANT EXPORTER
and a strong global competitor in costs primarily due to its productivity and exchange rate
USA Imports Participation
(selected countries, % of total) (1)
Cost competitiveness Index
vs. Top 25 Countries (2)
Labor Cost Mexico vs. China
Mainvariables:exchangerate,
costoftransportandproductivity(USD/hour) (1)
Country 2014
5.718.1
19.93.1
14.818.4
1990
12.56.1
Top 25 Average
2004-2014
+75
+98
+27
+7
+71
Cost of
Electricity
Cost of
Natural Gas
Productivity
Currency
Wages
Mexico
2004-2014
+55
-37
+53
-11
+67
Source: (1) Average Cost; Economist Intelligence Unit, US Department of Commerce. (2) Weighted average cost for all industries, U.S. Economic Census, U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis, International Labour Organization, Euromonitor, BCG analysis.
20141990
4.20.6
3.31.6
17. Automotive Plants in Mexico
#7Producerof
lightvehicles
6% of GDP
SOME INDUSTRIES ARE TAKING ADVANTAGE OF MEXICO’S BENEFITS
automotivemanufacturingexceedsremittances,tourismandoilproduction.Between1993-2014automotiveproductionhasincreasedfrom1.0Mto3.3M
Source: Banxico,2015.
14
#6Producerof
heavyvehicles
ofcarsintheUSA
originatefromMexico19%
18. 15
MEXICO HAS BECOME A RECOGNIZED MANUFACTURED GOODS EXPORTER
top 2013 Mexico exports (Billions USD)
Source: ProMéxico con información de Global Trade Atlas, 2014.
Transport
vehicles
Computersand
components
TV
receivers
$17.6 $17.4 $16.7
Light
vehicles Auto-parts
$32.4 $20.5
Phonesand
accessories
$18.0
Seating
Medicaland
surgicalequipment
Refrigeratorsand
coolingequipment
$5.3 $5.1 $4.4
Electric
conductors
Solid
gold
$10.2 $5.8
Tractors
$5.6
See more here...
19. MEXICANS ARE MORE CONNECTED THAN EVER
but ranks 75 on the digitization index according to the WEF(1)
16Source: (1) World Economic Forum 2015, IAB 2016, Competitive Intelligence Unit 2016.
18M
Facebookusers
5 worldwide52M
vs.Chile34%andUSA60%
Ranked
75 onthe
digitization
index(1)
homeshavePay TV
Smartphones
Internet users
68M
8% of small
businesses
haveawebsite
th
th
63M
vs.5Min2011
20. MEXICO RANKS 6 IN WORLD HERITAGE SITES
butinsecurityandlackofinfrastructureputit44th in tourism competitivity
17Source: World Tourism Organization. 2014, UNESCO 2015.
Global Tourism Competitivity Index
(Ranking of 140 countries, 2014)
by number of tourists
#10 #22
by income from foreign tourists
Culture
19 6 2
31 4 14
49 12 7
29 1 2
15 13 23
3 5 22
30 8 57
10 16 33
8 21 121
CountryRanking
1
2
3
4
5
6
7
8
44
Nature Security
5
23
23
5
23
23
5
23
61
Infrastructure
25
5
31
3
8
10
4
16
6
World Heritage Sites
TH
21. MEXICO’S GOVERNMENTAL FINANCES ARE SOLID
yet the nation lacks adequate private-sector and venture-capital financing
18Source: SHCP, Banxico 2015, Banco Mundial 2016.
12%
10%
8%
6%
4%
2%
2002 2004 2006 2008 2010 2012 2014 2015
Domestic Credit Allocated to the Private Sector (% of GDP)
Annual Inflation (%) Government Debt (% of GDP)
Mexico Latin America and the Caribbean
60%
50%
40%
30%
2000 2002 2004 2006 2008 2010 2012 2014
Venture Capital Investment as a Percentage of GDP, 2014
~20x
0.01%
0.33%
~30x
0.005%
India
Developed
countries China LATAM MEXICO
0.15%
0.25%
50%
20%
30%
40%
10%
0
2002 2004 2006 2008 2010 2012 2014
22. FISCAL AND MONETARY PRUDENCE IS ONE OF MEXICO'S STRENGTHS
despite low economic growth rates and fiscal deficit growth
Source: CIA World Factbook, SHCP 2015.
19
-3% -1% 1% 3% 5% 7% 9%
Publicdebt(%ofGDP)
Fiscal deficit (& of GDP)
Brazil
Chile
Germany
Australia
Italy
Canada
France
Portugal
Spain UK
Ireland
Greece
Maastricht Criterion
(≤60% of GDP)
)
Maastricht Criterion
(≤3% PIB)
Debt and Fiscal Deficit in Selected Countries vs. Maastricht Criterion
USA
(4.1%)
2015
MexicoMexico
100%
140%
180%
20%
60%
23. 9.9
5.0 4.8
3.7
2.9
2.4 2.4
China
Chile*
Emerging
Economies*
Colombia*
Spain
Mexico
Brazil*
LOW ECONOMIC GROWTH PERSISTS
mainly due to slow progress in productivity
Source: * 1983-2014 (1) IMF (2) Kehoe y Meza (2011), “Catch-up Growth Followed by Stagnation: Mexico, 1950–2010,” Latin American Journal of Economics, 48.
20
Economic Growth Comparative
(Selected countries, 1983-2015*) (1)
Total Productivity Factor in Mexico
(1950-2010) (2)
110
150
190
230
250
1950
1956
1962
1968
1974
1980
1986
1992
1998
2004
2010
Index,1950=100
Annual Average Drop
1980-2010: 0.7%
24. 21
MEXICO HAS ACHIEVED IMPORTANT LEGISLATIVE REFORMS
which according to preliminary estimates will have a positive impact on GDP
Source: ProMéxico with information from SHCP 2016.
Estimate of Structural Reforms Impact on GDP Growth
(GDP percentage growth, 2013-2018)
4.4 - 4.9%
+0.3%
+1%
+0.5%+0.1%
2.5 - 3%
GDP growth rate
(2013)
Estimated growth
rate (2018)
Labor
reform
Energy
reform
Fiscal
reform
Telecommunications
reform
25. LAW ENFORCEMENT INNEFICIENCY IS ALARMING
the outcome of bias, few cases ever reaching court, information opacity and corruption
22Source: ENVIPE (2013), México Unido Contra la Delicuencia (2013), Montes, Pesos sin contrapesos: corrupción y gobiernos locales, Índice de Competitividad Internacional 2015, (IMCO).
In the Last 16 Years, 272 Corruption Scandals
Involving Governors Have Been Reported by the Press
Sentencing Effectiveness in Corruption Cases
Involving Accused Governors in Mexico vs. USA
(2000-2015)
Accused
governors
Investigated
cases
Detained
governors
Mexico
41 16/41 4/41
USA
9 9/9 9/9
Law Enforcement Efficiency
(Percentage of commited crimes, 2015)
1.7M
5% reported crimes
33M
94.7%
unreported
crimes
0.3%
sentenced criminals
PunishedUnpunished
251 cases 21 cases
91.7% 8.3%
26. Perception of Corruption Associated
With Law Enforcement Agencies
(Affirmative responses, 2015*)
Making Shady Deals:
a Way of Life
65%
%
68%
%
Judicial police
Municipal police
77Transit police
64%Prosecution authorities
65%Judges
Note: Affirmative public-survey response to the question
“Do you consider the following Institutions corrupt?”
23Source: Encuesta Nacional de Victimización y Percepción sobre Seguridad Pública 2014, INEGI.
JUDICIAL INSTITUTION PRESTIGE HAS BEEN TARNISHED
leading to generalized pessimism and demoralization
“Hey, if
you scratch
my back...”
“Help me
help you”
“One hand
washes the
other”
“I leave it
up to your
judgment”
“So, how do we get
on the same page
on this?”
“You don't
have to feed me,
just get me a spot
at the table”
See more here...
27. from Colombia
from Asia
from Colombia, Venezuela and Brazil
Sinaloa
Sinaloa Cartel
Beltrán Leyva
The Mazatlecos
El Chapo Trini/El Cadete
Jalisco Cartel New Generation
Knights Templar
The Michoacan Family
Guerreros Unidos
Los Rojos
Independent Cartel of Acapulco
The Viagras
The Zetas
Gulf Cartel
All drug traffic
Marijuana and methamphetamines
Cocaine
Production areas
Methamphetamine precursors
Tierra Caliente
Tamaulipas
Mérida Cancún
Acapulco
Mazatlán
Culiacán
Matamoros
Boca del Río
Torreón
Júarez
Mexicali
Nogales
Tijuana
Obregón
Hermosillo
Manzanillo
Lázaro
Cárdenas
Nuevo
Laredo
Reynosa
Territorial organization of cartels and illegal drug flow in Mexico
Annual drug production in Mexico*
15,800
cubic tons
MARIJUANA HEROIN
18.0
cubic tons
CD MXCD MX
MonterreyMonterrey
GuadalajaraGuadalajara
DRUG TRAFFICKING HAS AFFECTED MEXICO PROFOUNDLY
because of proximity to the US, a roughly $200Bn USD per-year consumer market
24Source: INE, PNUD, 2013. World Drug Report, 2013. *Ilegal drugs in selected products.
Tampico
28. AGU
QTO
COA
NLE
GUA
JAL
CHH
TAM
BCN
CAM
TLA
DUR
GRO
ROO
BCS
COL
NAY
SIN
TAB
ZAC
PUE
SLP
SON
MEX
CDMX
CHP
MIC
YUC
HID
MOR
OAX
VER
STRONG INSECURITY PERSISTS IN VARIOUS STATES
the outcome of drug trafficking plus inadequate rule-of-law enforcement
Source: Mexico Peace Index 2015 - visiónofhumanity.org.
25
Peace/Security Index by Mexican State
AGUASCALIENTES
QUERÉTARO
COAHUILA
NUEVO LEÓN
GUANAJUATO
JALISCO
CHIHUAHUA
TAMAULIPAS
BAJA CALIFORNIA NORTE
CAMPECHE
TLAXCALA
DURANGO
GUERRERO
QUINTANA ROO
BAJA CALIFORNIA SUR
COLIMA
MEXICO CITY
NAYARIT
SINALOA
TABASCO
ZACATECAS
PUEBLA
SAN LUIS POTOSÍ
SONORA
MEXICO STATE
CHIAPAS
MICHOACÁN
YUCATÁN
HIDALGO
MORELOS
OAXACA
VERACRUZ
Most peaceful Most dangerous
30. Your ideas and comments are welcome at research@sws.ms
This presentation seeks to enhance
understanding of today’s Mexico and help
generate ideas for it improvement
www.ignia.mxwww.sws.mswww.risecapital.com
