Template:Economic Crisis in Mexico (2008-2009)

From blackwiki
Jump to navigation Jump to search

The crisis in Mexico has thrown more than a million people into unemployment until July 2009.[1] The 2008-2009 economic crisis in Mexico was the worst economic recession in this country in 70 years. According to the forecasts of the Organisation for Economic Co-operation and Development, the contraction of the Mexican gross domestic product to ending 2009 would be 8%. [2] It is directly related to the crisis that co-occurred in various countries of the world. The slowdown in the United States and Mexico's economic dependence on its northern neighbor contributed to increasing the effects of the crisis. Other internal events are added to this table, especially Influenza Pandemic that affected the country since April 2009.

The contraction of the Mexican gross domestic product is one of the biggest falls not only in Latin America but throughout the world in the panorama of generalized crisis. Official positions relate this fall to the episode of the Influenza Pandemic. Still, there are indications that the negative behavior of the Mexican economy in 2009 is the result of processes that had been brewing years ago. For example, in July 2009 the National Institute of Statistics and Geography presented a report that revealed that from 2006 to 2008 economic inequality in the country had grown. Therefore, this means that the highest decile of socioeconomic level in the population increased their incomes, while the lowest four deciles saw their share of national wealth decrease.

Development

The foreign investors took out of Mexico resources for 22 thousand 190 million of dollars deposited in the Mexican Stock Exchange or government debt bonds federal.[3] which adjusted for the depreciation of the peso would be US $ 7.6 billion.[4] . Amid the worst global financial crisis, the government of Mexico made a debt issuance of $ 2 billion in international markets, with the expiration date of 2019. The Secretariat of Finance and Public Credit reported that the operation had a demand of more than 4 billion dollars, which is more than twice the amount issued.


Mexican Peso

To contain the depreciation of the peso, the financial entity auctioned 18 thousand 227 million dollars of the international currency reserve, from October to [[December 11]. [5].Throughout 2008, the Mexican peso was subjected to successive devaluations that led it to lose around 50% of its value against the US dollar. This occurred in the context of the global financial crisis, which among other things involved the bankruptcy of numerous banking institutions, the most important occurred in the United States. In Mexico, investors began to acquire large amounts of dollars. As the demand for the US currency increased, the peso was devalued. In December 2008, the depreciation of the Mexican peso reached 26.70%, with a price of 14 pesos per dollar.[6]. The situation reached the point that the Congress of the Union requested Guillermo Ortiz, Governor of Bank of Mexico (Banxico), to clarify the way in which it was intended to face the devaluation of the national currency. [7].As a precautionary measure, Bank of Mexico had been "injecting"[8] large amounts of dollars into the foreign exchange market in order to contain the devaluation of the peso. By February 2009, (Banxico) dollar reserve had lost 20.62 million dollars, which were destined to lessen the pressure on the peso.[9]. Some specialists attributed the volatility of the price of the dollar to a combination of multiple factors. These include the aforementioned increase in the demand for the currency, but also the action of speculators, the withdrawal of investments in foreign currencies, and a poor perception of the performance of the Mexican economy. [10]

Emergency Economic Plan in the Face of Mexican Crisis

Given the impact of the crisis, the country’s authorities have changed their economic strategy. President Calderón proposed a mildly Keynesian, anti-cyclical economic plan aimed at countering the effects of the international recession through government spending and investments.[11][12]. The Program to Foster Growth and Employment includes a series of structural and momentary measures aimed at responding to the recession. According to official estimates, the program would entail higher fuel subsidies, making financing available for priority sectors, and support for infrastructure projects for a total of MXN $255.3 billion,[13] or about US$19 billion. The authorities[14] said that the resources involved represent one percent of GDP. In early January, authorities announced a second plan called the National Accord for Family Finances and Employment, specifically directed at saving jobs through 20-odd measures organized around five axes: support for employment, for family finances, competitiveness, small and medium-sized companies, and investment in infrastructure. In each of these categories, it puts forward actions to support temporary employment programs; a 10-percent reduction in the price of LP gas and electricity for industry; or to make 20 percent of government purchases from small and medium-sized companies and have Nacional Financiera and the Mexican Foreign Trade Bank (Bancomext) increase their number of loans by 20 percent.

Several sectors of the business community have criticized this second plan. The powerful Business Coordinating Council (CCE) stated that the amounts involved in the anti-cyclical plan are “minimum and deceptive,” because, according to the Private Sector Studies Center, they barely represent 0.5 percent of GDP, while in other countries, 10 to 12 times the resources in relative terms have been used for this kind of plan.

The scarcity and high cost of credit for companies at the hands of the commercial banking system is also a barrier to overcoming economic stagnation. Recent hikes in interest rates for consumer credit on average, more than 70 per- cent a year— have once again brought up the question of the role of the foreign-controlled commercial banks. In effect, financing costs with active rates of over 20 percent a year confirm that the banking sector’s performance does not favor investment in production, but that its business depends more on consumer credit, mortgages and the high unregulated commissions they charge for their services.

President Calderón’s plan[15] suggests a timid transition from a neo-liberal policy to a different, Keynesian policy based on government[16] spending and aggregate demand.[17] This suggests that the conservative economists in charge of government strategy want to change the “script” without really sharing a Keynesian approach for fighting the crisis. Despite everything, they believe in price and exchange rate stability and “healthy finances” more than in growth and employment. They are suffering from chronic change-resistant fundamentalism.

  1. Roberto Nájar "México vive la peor crisis en 70 años", en BBC Mundo, 2 de julio de 2009, consultada el 21 de Noviembre de 2009.
  2. "OCDE: desempleo de 6.5% en México en 2010", en La Jornada, 20 de Noviembre de 2009.
  3. Inversionistas externos sacaron del país $22 mil 190 millones La Jornada. Consultado el 18-12-2008.
  4. Prevé Bancomer variación del PIB México de 0% al -1.7% El Semanario sin Límites. Consultado el 19-12-2008.
  5. "Escapa inversión extranjera de México" (in Spanish). Archived from the original on 2009-02-09. Prensa Latina. Consultado el 18-12-2008.
  6. Zúñiga, Juan Antonio: "Dólar a 14 pesos; la moneda acumula una devaluación de 26.70%", en La Jornada, 31 de diciembre de 2008, consultado el 25 de julio de 2009.
  7. Méndez, Enrique y Víctor Ballinas: "Legisladores piden a Ortiz explicar cómo contendrá la devaluación del peso" en La Jornada, 16 de enero de 2009, consultado el 25 de julio de 2009.
  8. Mankiw, N. Gregory (2013). Macroeconomics, 8th Edition. New York, NY: Worth Publishers. ISBN 978-1-42-924002-4.
  9. González Amador, Roberto: "La devaluación del peso ya costó 20 mil 62 mdd en reservas", en La Jornada, 4 de Febrero de 2009, consultado el 25 de julio de 2009.
  10. Rodríguez J., Israel: "Especulación y salida de divisas devalúan el pso: analistas", en La Jornada, 8 de febrero de 2009, consultado el 25 de julio de 2009.
  11. GDP Growth | World Bank Archived May 31, 2011, at the Wayback Machine
  12. Mexico's Economy | About.com Archived August 2, 2016, at the Wayback Machine
  13. "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. Banco Mundial. Retrieved 5 October 2019.
  14. Hider, James (December 1, 2006). "Mexican Inauguration Erupts into Fistfight". The Times. London. Retrieved 2008-06-09.
  15. Poverty Reduction and Growth: Virtuous and Vicious Cycles, Chapter 3, How did we get here? p. 48
  16. "Foreign direct investment (FDI) - FDI flows - OECD Data". theOECD. In billions of US dollars: 8.256 in 2007, 1.157 in 2008, 9.606 in 2009, 15.145 in 2010, 12.992 in 2011, 23.338 in 2012
  17. "Trials and errors". The Economist.