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Mexico Weekly News 09.17
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MEXICO WEEKLY

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Brexit could hit investment, trade, aid, and integration in Latin America, but there will also be opportunities

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Brexit is likely to affect foreign direct investment, trade, and development funding in Latin America, aside from being politically influential. But despite the negatives, it may also provide opportunities to strengthen ties with the UK, writes Michelle Campbell.

The ramifications of the UK’s decision to leave the European Union for Latin America remain unclear eight months after the Brexit referendum. Indeed, the uncertainty that seems to pervade all things Brexit is likely to continue for the next couple of years as the UK and EU negotiate the terms of their divorce.

Having said that, we could reasonably assume that the repercussions of the UK-EU split will be transmitted to Latin America primarily via four channels – foreign direct investment (FDI), trade, development funding and political influence.

Foreign Direct Investment

FDI has played a notable role in the expansion of traditional and non-traditional sectors in the region such as mining, telecommunications, banking and renewable energy. Today the EU is Latin America’s largest investor with FDI stock of roughly €500 billion, equal to 43 per cent of regional stocks; Spain, the UK, Belgium, France, the Netherlands and Germany are among the top 10 investor economies as ranked by UNCTAD. Unsurprisingly, the share of investment flows to the extractive sector has been on the decline now that the ‘commodity super-cycle’ is over. Conversely, the region’s services sector is receiving a larger share of inflows; in Central America the sector accounts for around 65 per cent of inward FDI. Compared with the EU, the UK’s role as an investor in Latin America is considerably smaller and heavily skewed to the natural resource sector in a few economies. In 2015 net UK FDI to Central America was €3 billion, and at the country level the UK accounts for 18 per cent of Peru’s inward FDI and is Colombia’s second largest investor economy.

 

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Financial Times
Mexico expanded more rapidly than first thought in Q4

23 February 2017

Mexico’s economy grew at a quicker rate than first thought in the fourth quarter, the country’s statistics institute said on Wednesday. The country’s economy expanded 0.7 per cent in the final three months of the year from the third quarter, and was up from a previous estimate of 0.6 per cent. Growth was 2.4 per cent year-on-year, also better than the initially reported 2.2 per cent rate. Economists had expected the figures to have held steady between estimates. Inflation statistics that are due out later in the week may garner more investor attention as the Latin American country has seen as sharp rise in price growth thanks to the fall in the peso following the November US election...

For complete article click here

The Guardian
Tillerson endures 'tough trip' to Mexico as Trump stokes 'bad dudes' rhetoric

23 February 2017

Donald Trump issued a staunch defence of his expanded deportation policy on Thursday, claiming his administration was getting “bad dudes out of this country”, further souring an already tense visit to Mexico by his secretaries of state and homeland security.

The president made his remarks at a business forum in Washington while Rex Tillerson, his secretary of state, was meeting his Mexican counterpart, Luis Videgaray.

Tillerson emerged to concede that there were differences between the two countries. He said it was natural for “two strong, sovereign countries” to disagree at times, but added they would continue their dialogue. 

“In a relationship filled with vibrant colors, two strong sovereign countries will have their differences,” Tillerson said, summarising the talks, which he said covered “the full range of bilateral issues”, including defending the border against “terrorism” and “drug cartels”...

For complete article click here

Bloomberg
U.K. Banks' Loss of EU Passport a `Major Threat,' LSE Study Says

23 February 2017

The U.K. government must ensure British financial-services companies don’t lose their ease of access to the European Union after Brexit as a “matter of urgency,” according to a report backed by high-profile British economists including former Bank of England Deputy Governor Charlie Bean.

The study, compiled by the London School of Economics with input from business leaders, ex-policy makers and academics, says the U.K. needs to retain near-equivalent European Union passporting rights and warned that alternatives are “costly and time-consuming.”

It sets out a list of recommendations for Prime Minister Theresa May’s administration to bolster growth, including prioritizing free-trade deals with the U.S. and EU. It also encourages the government to boost skills, develop an industrial strategy, and increase competition in finance.

U.K. banks are developing their Brexit plans after May ...

For complete article click here

The Guardian
How can health services keep pace with the rapid growth of cities?
24 February 2017

The relentless growth of urban populations is driving city and national governments to increase access to healthcare while tackling the root causes of poor health.

According to Oxford Economics [pdf], the world’s largest 750 cities will be home to 2.8 billion people by 2030 – more than a third of the global population. They will account for almost a third of the world’s jobs and more than half its consumer spending. More than a dozen cities will have populations greater than 20 million.

Rapid, uncontrolled urbanisation strains many aspects of city life that determine health. Traffic, factories, generators and construction poison the air, meanwhile water supplies can become contaminated, poor housing harms the health of children, and food supply and quality can be compromised...

For complete article click here

New York Times
Eduardo García’s Path: Migrant Worker, Convict, Deportee, Star Chef

25 February 2017

As bad hombre tales go, Eduardo García’s is classic. A border-crossing Mexican immigrant, he moved around the United States through the better part a decade, harvesting the produce that most of us take for granted throughout what might be thought of as a stolen childhood. Starting at age 5, the unschooled Mr. García embarked on a journey that drew on native intelligence, natural gift and a willingness to take on backbreaking work to make something of himself — in his case, a chef.

Like many of the immigrants keeping American farming alive and restaurant kitchens humming, his true citizenship was in a shadow economy...

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The Washington Post
Trump’s taunts are stirring a level of nationalism Mexico hasn’t seen in years

25 February 2017

Confrontation with the United States is so central to Mexican history there’s an institution dedicated to the trauma. It’s called the Museum of Interventions.  

Remember the Alamo? They do here — as the prelude to a string of defeats, invasions and territorial losses that left Mexico wounded and diminished, its national identity forged by grievance.  

The museum is housed in a former convent where Mexican troops were overrun by U.S. soldiers in the 1847 Battle of Churubusco. And for most of the three decades since the museum opened, its faded battle flags seemed like the stuff of buried history, an anachronism in an age of galloping North American Free Trade Agreement integration. 

But President Trump’s wall-building, great-again nationalism is reviving the old Mexican version, too. His characterization of tougher border enforcement and...

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Financial Times
Chinese wages now higher than in Brazil, Argentina and Mexico

25 February 2017

Average wages in China’s manufacturing sector have soared above those in countries such as Brazil and Mexico and are fast catching up with Greece and Portugal after a decade of breakneck growth that has seen Chinese pay packets treble. Across China’s labour force as a whole, hourly incomes now exceed those in every major Latin American state apart from Chile, and are at around 70 per cent of the level in weaker eurozone countries, according to data from Euromonitor International, a research group. The figures indicate the progress China has made in improving the living standards of its 1.4bn people, with some analysts arguing that increases in productivity could push manufacturing wages even further beyond what are traditionally seen as middle-income countries. But the fast-rising wage levels mean China could also start to lose jobs to other developing countries willing to undercut it. The data also highlight the problems facing Latin America, where wages have stagnated...

For complete article click here

Bloomberg
Mexico's Energy Policy Supports Stable Oil Markets
24 February 2017

Mexico Deputy Energy Minister Aldo Flores Quiroga discusses the nation's oil production, investments in the oil industry, and the relationship between Mexico and the United States. He speaks with Bloomberg's Anna Edwards on "Bloomberg Markets: European Open." (Source: Bloomberg)

For complete article click here

Reuters
Mexico warns it will end NAFTA talks if U.S. proposes tariffs - Bbg
19 February 2017.

Mexico's economy minister Ildefonso Guajardo warned that his country will break off negotiations on the North American Free Trade Agreement (NAFTA) if the United States were to propose tariffs on products from Mexico, Bloomberg reported on Monday.

"The moment that they say, 'We're going to put a 20 percent tariff on cars,' I get up from the table," Guajardo told Bloomberg in an interview. (bloom.bg/2m20ys4)

U.S. President Donald Trump has vowed to scuttle NAFTA, the 1994 trade accord which also includes Canada, if he cannot recast it to benefit U.S. interests, raising the risk of a major...

For complete article click here

Excelsior by Duncan Taylor
Tendencias y retos en la región del Oriente Medio y África del Norte: una perspectiva del Reino Unido
27 February 2017

Hace seis años, la comunidad internacional recibió la noticia de un levantamiento democrático que sacudiría gobiernos en nombre de la democracia. La Primavera Árabe demostró la importancia de que los gobiernos cuenten con mecanismos que permitan a la ciudadanía expresar su inconformidad a través de canales efectivos. Sin embargo, la realización de esta meta enfrenta todavía enormes retos, lo cual significa que necesitamos mejorar la cooperación en la comunidad internacional para poder continuar impulsando la prosperidad en la región. Oriente Medio y África del Norte requieren respuestas ágiles que integren perspectivas tanto a corto como a largo plazos y la comunidad internacional tiene un papel importante en la promoción de un futuro próspero y de paz en estos países.

En el corto plazo, el reto es en materia de seguridad y crisis humanitarias...

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Financial Times
Pemex hits production target for first time in 5 years

27 February 2017

Pemex, Mexico’s national oil company, reaped the rewards of a new focus on efficiency as it slashed its 2016 net loss by nearly 60 per cent from the year before, cut operating costs by 26 per cent and hit its production target for the first time in five years. “In a nutshell, after a somewhat complicated year, our efforts have finally begun to bear fruit,” Juan Pablo Newman, chief financial officer, told a conference call with analysts on Monday as Pemex reported a 58.5 per cent fall in net losses to 296bn pesos ($14bn) from 713bn pesos in 2015.  However, the company acknowledged it still had work to do. Mr Newman told the call: “2017 represents an inflection point. We now have stable finances with a positive trend, but we believe there is still a lot of room for improvement.”  For most of its 80-year history Pemex had no domestic competition, so resources were spread across all its businesses regardless of whether they made money or not, and the company earned a reputation for rampant corruption. 

For complete article click here

Reuters
GE's Immelt says U.S. 'diverging' from the world

27 February 2017

The United States is "diverging" from the rest of the world and will be "less of a leader in trade", General Electric Co (GE.N) Chief Executive Jeffrey Immelt said in a letter to shareholders.

There was "deep skepticism" toward the ideas that have powered economic expansion of the industry for a generation and concepts such as "innovation, productivity, and globalization" were being challenged and "protectionism" was on the rise, he said in the letter. (invent.ge/2mvmLfQ)

"We're in an era when some very basic assumptions about the global economy are being tested - an era when trust in big institutions is so low that the most valued "strategy" is simply change in any form," Immelt said...

For complete article click here

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