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Mexico Economic Updates May 2006

Tony Burton


International Reserves

The nation's foreign reserves stood at 68.678 billion dollars in mid-April, according to the Bank of Mexico, the nation's central bank. The reserves reached an all-time high of 69.609 billion dollars at the end of January.

Mexico has the ninth largest foreign reserves in the world, according to the UNCTAD (United Nations Conference on Trade and Development). Only Japan, China, India, Hong Kong, Taiwan, South Korea, Singapore and Germany have larger foreign reserves. By way of comparison, U.S. foreign reserves are around 64 billion dollars, and Canada's reserves about 34 billion.

Mexico's foreign reserves strength continues to play a key part in ensuring the nation's economic stability, particularly important in this election year.


Stock Market at new high

The IPC, the main index of the Mexican Stock Market (Bolsa Mexicana de Valores) reached a record high of 20,174.64 at press time on April 21. It is the fifteenth time the previous record has been exceeded so far this year, and represented a 4.26% rise in a week, and a 13.2% rise since the start of the year.


Industrial activity up 5.4% in February

Mexico's industrial production rose 5.4% in February, compared with the same month in 2005, according to the National Statistics Institute, INEGI. Despite having fewer working days, February production was 0.16% higher than January's figure.

Among those sectors doing particularly well were construction (up 8.7% year on year) and minerals (up 14.1%). The minerals category includes ores of several metals (gold, silver, lead, zinc, copper) which have commanded higher than usual prices recently.


Can Mexico attract more IT business?

The national IT (Information Technology) business was worth around 2 billion dollars in 2005, almost 11% more than a year earlier. A publicity campaign is being launched in the U.S. this month with the slogan "Mexico IT, Always near your business". The 2-million-dollar campaign will mainly be adverts in trade magazines, and will target the key players in every major city, reminding them that Mexican software and systems experts are geographically close to their own corporations, and that strategic alliances could be mutually beneficial.

The Mexican government's Prosoft program aims to raise the value of national software production to 5 billion dollars by 2013. In 2005, software exports, excluding those made within corporations, or between subsidiaries of the same company, were worth 300 million dollars. The projected total this year is 500 million dollars.


Ford México to export Fusions

Ford-Mexico plans to export the Fusion model, made at its Hermosillo plant in Sonora, to Brazil and Argentina. The Sonora plant also turns out Mercury Milan and Lincoln Zephyrs, both enjoying success in the U.S. and Canadian markets. Production at the plant is approaching its capacity of 305,000 vehicles a year.


How much are Mexico's exports worth?

The value of Mexico's exports grew an impressive 14% in 2005 to 213.7 billion dollars (2.8% of the world total), making the nation the world's tenth largest exporter, according to the World Trade Organization.


More exports to Canada

Mexico's exports to Canada rose 7.5% in the first two months of this year, according to Statistics Canada, to reach 2.028 billion (US) dollars. Export segments doing well included agricultural and fisheries products (up 19% to 146 million dollars), energy-related products (up 31% to 160 million dollars) and industrial goods (up 12% to 171 million dollars). The two most important divisions of exports by value are machinery and equipment (which rose 6.2% to 718 million dollars) and vehicles and vehicle parts (up 5.2% to 698 million dollars).


Is Cancún back to normal?

Just six months after the 235 kilometer an hour winds of Hurricane Wilma tore through the resort and stripped the sand off the beaches, the Tourism Secretariat has declared that the beaches of Cancún have been fully restored.

A Belgian maritime engineering company Jan De Nul was awarded the contract for the beach restoration work, which involved special barges to dredge 2.735 million cubic meters (96 million cubic feet) of sand from the ocean floor. The work was finished ahead of schedule due in part to favorable weather.

Some 3 million tourists vacation in the resort each year. Occupancy rates are gradually climbing back to normal.


Unemployment down; sales up

Unemployment in March fell to 3.42%, down slightly from 3.6% in February, according to the National Statistics Institute, INEGI. At the same time, wholesale revenues rose 1.5%, and retail sales 3.3%. The best wholesale results were reported for machinery and trucks, while the strongest retail sectors were hardware, glass, automobiles and supermarkets and department stores.


How much less do women earn than men?

Women earn an average of 7.4% less than men in equivalent jobs, according to INEGI. The survey compared male and female salaries, given identical qualifications and experience. Of the 11 employment categories included in the survey, 9 were discriminatory against women. They included artisans and laborers (34.1% less), independent sales (21.3% less) and professionals (21.1% less).

The only two categories where women earned more than men were domestic work (12.1% more) and industrial supervisors (0.7% more).


Natural Gas: Record Production

Petróleos Mexicanos (Pemex) has announced that its March figures for natural gas production exceeded all previous levels. Pemex commercialized 5.16 billion cubic feet of gas a day during March, bringing the first quarter average to 5.09 billion cubic feet a day, 10% more than for the same period in 2005. Most of the increase comes from new fields in the north of the country.


Record oil sales to U.S.

Pemex has made record crude oil sales to the U.S. worth 4.88 billion dollars in the first two months of the year, almost 66% higher than the same period in 2005, according to official figures from the U.S. Department of Trade. Canada exported more oil, but with a slightly lower value than Mexico's total to the U.S.


How many Internet users are there in Mexico?

The answer, according to a survey carried out by consultancy Mitofsky for the Mexican Internet Association is 17.1 million. The survey revealed some interesting facts. There are 10.8 million personal computers in Mexico, 9.9% more than a year ago.

About 58% of Internet users now access the net principally, or solely, from their homes; the remaining 42% rely on computers in their workplace. The average connection time has risen substantially in recent years, and is now clocked at about 2 hours.

The majority of Mexican Internet users are aged between 13 and 35, and come from the higher socio-economic and educational groups. Almost 60% of users are male.


Which is the Best Small Hotel in the World?

Despite its unlikely name, the Hotel Básico, in Playa del Carmen, has been voted the best small hotel in the world by a group of architects and interior designers.

The hotel was awarded a Travel and Leisure prize for its original interior design, described as "full of pleasant surprises for its guests". The designer, Héctor Galván, says that he tried to ensure that the hotel echoed the style of Mexican beach hotels from 40 years ago.


Japanese auto firms invest

Japanese automakers are investing heavily in Mexico this year. It seems like every Japanese vehicle maker wants part of the action, following the signing of the free trade agreement between Mexico and Japan. Nissan is investing 1.3 billion dollars to expand its manufacturing capacity and introduce a new model. Toyota and Honda are doubling their production levels, and Mitsubishi is investing an additional billion dollars.

In addition, four other firms - Mazda, Isuzu, Suzuki and Subaru - are establishing operations in Mexico for the first time. The Economy Secretariat is currently engaged in bilateral trade talks with South Korea, which may lead to a similar influx of new companies in the near future.


Santiago hydro-power scheme

The El Cajón hydro-electric plant is scheduled to come on line in November this year. The construction sector is now awaiting details of the specifications of the "La Yesca" hydro-power station, also on the River Santiago. Both power plants are part of a complex Santiago River power scheme which will comprise 27 hydro plants when completed, generating a total of 4,300 megawatts of power.

The 850-million-dollar, 750-megawatt La Yesca plant involves the construction of a massive dam, 210 meters high, the highest dam meters) of its kind in the world. The reservoir behind the dam will hold up to 12 million cubic meters of water.


Market for organic produce

The Agriculture Secretariat estimates that the area cultivated for organic crops in Mexico has risen from 25,000 to more than 300,000 hectares in the last decade. About four fifths of this area is already certified organic; the remainder has initiated the paperwork.

The Secretariat reports that demand for Mexican produce, especially organic produce, is strengthening rapidly in Europe. Among the organic items sought by European buyers are fresh coconut, honey, coffee, cacao (the raw material for cocoa and chocolate), limes, mangos, pineapples, avocadoes and nopales.

 


The text of this report was not submitted to any Federal Mexican Authorities or approved by them prior to publication. It is based on sources we believe to be reliable, but its accuracy is not guaranteed.

Published or Updated on: July 28, 2006 by Tony Burton © 2008
Contact Tony Burton

Author of Mexican Kaleidoscope: myths, mysteries and mystique (Sombrero Books, 2016),  Western Mexico, A Traveler's Treasury (4th edition, Sombrero Books, 2013) and "Lake Chapala Through the Ages; an anthology of travelers' tales" (Sombrero Books, 2008), available from all good book stores, and via his author's page at Amazon.com. Co-author of "Geo-Mexico, the geography and dynamics of modern Mexico" (Sombrero Books, 2010). His blog is at geo-mexico.com.

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