Mexico has many issues including poverty, crime, income inequality and trade surpluses with both Canada and USA. Despite NAFTA the way of life for the average Mexican has not improved. Mexican has seen an increase in those people living in poverty. It is estimated that about 53M people live in poverty.

1. Review of Mexico –
June 2018
BY: PAUL YOUNG, CPA, CGA
DATE: JUNE 28, 2018

2.  This presentation is on perspective when it comes to Mexico

3. Paul Young - Presenter
Bio
 CPA/CGA
 25 years of experience in Academia, Industry and Financial solutions
 Youtube Channel -
https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

4. Agenda
- New Government
- GDP
- Economy
- Banking Sector
- Government Policies
- Corruption
- Trade – Canada and Mexico
- Income Inequality / Mexico

5. Mexican Government
 Issues – President Prieto
 In his first two years he pushed through ambitious reforms in energy and telecommunications, the financial
sector and education, designed to unleash investment, boost competition and power growth.
 But three and a half years after his election, the economy is stubbornly tepid, while scandals and rising violence
have helped knock 9 percentage points off Mr Peña Nieto’s popularity rating so far this year.
 Mr Peña Nieto was unlucky that tenders to open the energy sector that had been expected to draw billions of
dollars in investment coincided with the global oil price crash. But the IMF forecasts that net foreign direct
investment inflows will amount to only 1.6 per cent of Mexico’s gross domestic product this year, well below
the 4.6 per cent Brazil saw in the 12 months to March, according to Goldman Sachs, even though Brazil is facing
its worst recession in a century.
 Drug Cartel
 Protection money from business

6. Mexico - GDP
• Mexico
• Depends on exports
• Mexico manufactures and exports the
same amount of goods as the rest of
Latin America combined. Foreign trade
is a larger percentage of Mexico's
economy than any other large country.
Mexico's #1 export is manufactured
products. It also exports silver, fruits,
vegetables, coffee and cotton.
• Mexico is the world's eighth largest
producer of oil, at nearly three million
barrels per day. This is less than
Canada, Iran, or Iraq but more than
other big exporters such as Kuwait,
Brazil, or Nigeria.
• Mexico has 44 free trade agreements.
That means any company that
manufactures there has duty-free
access to 60% of the world GDP.
International trade (exports plus
imports) equals 66% of the country's
GDP. That' much higher than Brazil
(26%) or even China (42%). (Source:
"Open for Business," The Economist ,
March 12, 2016.)

7. Mexican Economy – 2016 Outlook
 The Bank of Mexico said Wednesday that it still expects the country’s economy to grow
between 2% and 3% this year, but lowered its growth forecast slightly for 2017.
 In its quarterly inflation report, the central bank forecast gross domestic product would
expand between 2.3% and 3.3% in 2017, less than its previous estimate of 2.5% to 3.5%.
The economy grew 2.5% in 2015 and expanded 2.6% in the first quarter of this year.
 The main reason for the 2017 change is the lower outlook for U.S. industrial production,
which is a driver of Mexican output, Bank of Mexico Gov. Agustín Carstens said at a
news conference.
 Growth could be better if private consumption in Mexico continues to gain strength, or
the economy sees favorable effects from overhauls in areas such as energy,
telecommunications and the financial sector. On the other hand, a slowdown in the
global economy, and particularly the U.S., and more complex international financial
conditions restricting investment could lead to lower growth than expected, the bank
said.

8. Mexico Budget Deficit/Debt
• Mexico's budget deficit narrowed
to 61.563 billion pesos (3.57
billion) in the first quarter of 2016,
the finance ministry said on
Friday. The figure, which
represents a 38 percent decrease
from the deficit in the same
period last year, was helped by a
surplus of 8.534 billion pesos in
March.

9. Government Policies
 Roads and Infrastructure
 Mexico currently ranks 64 of 148 countries in terms of infrastructure, according to the Global Competitiveness Index of
the World Economic Forum. Economists agree that Mexico’s prospects for becoming a truly industrial economy will
remain limited unless the country accelerates its construction of the roads, railroads, ports, energy plants and other
physical infrastructure essential in any modern industrial economy.
 FDI (Foreign Direct Investment)
 Mexico's competitiveness has been hampered by the growth in organised crime, though corruption and administrative
inefficiency have been reported to be major problems as well. A wave of reforms initiated in 2014 may help improve the
regulatory situation in Mexico: the energy, telecommunications, labour, financial and education sectors have undergone
sweeping reforms aimed at improving the country's competitiveness. Since 2014, the Government has also been planning
to create new industrial centres(located in Guerrero, Oaxaca and Chiapas), which could encourage FDI. Substantial
infrastructure development, especially focused on airports, is planned to attract foreign investors. Moreover, according to
a report by the IMF, the exploitation of hydrocarbon reserveswill require an investment of USD 40 billion annually in the
years 2015-2019 and presents a considerable opportunity in the near future. The business climate in Mexico has
improved and the country ranked 38th in the 2016 Doing Business report of the World Bank.
 Inflation
 Consumer prices are at 2.4%
 Tax Policies
 Corporate Tax 30%
 Consumption tax 16%

10. Banking Sector
 he largest banks in Mexico (Group of 7 or G7) have been able to withstand the
past and recent economic crises, according to a new Fitch Ratings dashboard
report. The G7 have proven resilient due to their strong franchises, consistent
profitability, controlled asset quality, solid liquidity, and sound capital ratios.
The G7 is composed by Banamex, BBVA Bancomer, Banco Santander Mexico,
Banorte, HSBC Mexico, Scotiabank Inverlat and Banco Inbursa. Fitch's new
report also discusses key factors affecting the credit profiles of these banks.
Despite the currently less dynamic economy in Mexico, G7's performance
remains stable. G7 banks continue with consistent profits even in a low interest
environment and have quickly adapted their underwriting standards to the
operating environment in order to preserve comfortable asset quality. G7
banks are well capitalized and supported by solid internal capital generation
and to a lesser extent to capital infusion from its parent companies

11. Government Corruption

12. Canada and Mexico Trade
 Canada and Mexico are each other’s third largest trading partner. Canada-Mexico two-way trade amounted to
over $34.3 billion in 2014. This is a remarkable increase of more than 650% in merchandise trade since 1993,
the year before NAFTA came into force. Canadian direct investment in Mexico reached over $13 billion (stock)
in 2014, while Mexican direct investment in Canada totaled $884 million (stock) in 2014. There is a significant
number of Canadian companies that export to Mexico. Mexico is also a priority market for Export Development
Canada (EDC), which has had a resident presence since 2000, providing extensive financial services related to
Canadian exports and Canadian investments in the country. Mexico’s demographic and economic prospects
point toward an even greater growth in commercial exchanges.

13. NAFTA / Mexico
 January 2017 to October 2017 “The trade deficit in goods and services was $463 billion from January through October, up 12%
from a year ago, the Commerce Department said Tuesday. The United States has a surplus in services, such as banking, but a bigger
deficit in goods, such as cars. And the gap with Trump's two favorite rhetorical trade targets, Mexico and China, is getting bigger.
The overall trade deficit with Mexico is up 11% this year, and the deficit with China is up 7%. A trade deficit doesn't mean the
United States is losing money to China or Mexico, which is how Trump sometimes framed it during his presidential campaign. It
means American businesses and consumers bought more goods and services from Mexico or China than those countries'
consumers bought from American businesses. ”
 January 2018 to April 2018
Source - https://globalnews.ca/video/4288814/trump-claims-mexico-does-nothing-for-u-s-except-taking-our-money-and-sending-us-drugs or
http://money.cnn.com/2017/12/05/news/economy/us-trade-deficit/index.html

14. Source - https://www.bloomberg.com/news/articles/2016-11-24/chile-mexico-u-s-have-highest-
inequality-rates-oecd-says
Mexico Income Inequality

15. Source - http://mexiconewsdaily.com/news/mx-drops-28-places-on-corruption-index/
Mexico Corruption

16. 2018 - Election
Source - https://www.express.co.uk/news/world/980422/mexico-election-2018-latest-poll-andres-manuel-lopez-obrador-morena-pri-pan or
https://www.cnn.com/2018/06/27/americas/mexico-presidential-election/index.html
Issues:
• Homicides - Mexico had more than 25,000 homicides last year, the highest number
since the government started tracking the data two decades ago.
• Trade / Immigration - The two countries share billions of dollars in trade and a
border that stretches for nearly 2,000 miles -- across which President Donald Trump
has vowed to erect a wall. Millions of US citizens travel to Mexico every year, and
millions of Mexican immigrants -- undocumented and legal -- live in the United
States.
• Poverty/Income Inequality – Mexico has the highest inequality in Latin America -
https://www.telesurtv.net/english/news/Mexico-Has-The-Highest-Rate-Of-
Territorial-Inequality-In-LATAM-20180614-0014.html
• Drug Lords - http://www.latimes.com/world/la-fg-mexico-military-drugs-
20180618-story.html

17. Sources
 Contact: paul_young_cga@Hotmail.com
 Other links
 Socialism - https://www.youtube.com/watch?v=fhk2b97BYKU