Cash Pours in Despite Mexican President's Troubles James Fredrick - The Financial Times
go to original September 26, 2016

Recent drone footage shows the vast area in San Luis Potosi, where Ford is building a new plant. The new site will be home to all the company's small car production. (Ruptly TV)

“No one talks about the good stuff,” Mexico’s President Enrique Peña Nieto was quoted as saying as he prepared for his yearly state of the nation address. His remark, widely mocked, perhaps showed his sense of desperation. Four years into a six-year term, he is known more for scandals and gaffes than reforms. The rebooting of state-run enterprises was “oversold in terms of expectation”, says Marco Oviedo, Barclays Bank chief economist in Mexico. “We thought implementation was going to happen much more quickly.”

At the heart of the reforms is energy. Anticipation is high for Gulf of Mexico possibilities but big deepwater oil investment will not happen until 2018 at best. Auctions in the power sector are pulling in money but it will take years to phase out the dominance of state utility CFE. Meanwhile, telecommunications changes have made calls cheaper but this is not enough to lead growth and education reform has been a disaster, with protests preventing many students from returning on the first day of school this autumn.

Mr Peña’s only remaining economic plans of substance are special economic zones, designed to bring new shipping, energy and infrastructure projects to the country’s poorest states. But these areas desperately lack the rule of law, which they need before any sort of economic boom can occur. The budget shows the government is doing little to lead growth: public investment was just 3.1 per cent of GDP in the first quarter, the lowest since 1939. Scandals have afflicted some of the administration’s main infrastructure projects, such as a high-speed rail scheme that has been cancelled indefinitely.

Something odd, however, is happening in this economy: investment is nearing all-time highs. At the end of the first quarter, private investment in Mexico was 18.2 per cent of GDP. Foreign direct investment has grown steadily for three years and is on course to reach the government goal of $30bn this year, drawn by cheap labor, easy access to the US and trade agreements with 45 countries.

Read the rest at The Financial Times

Related: Mexico Fuel Hikes Deepen Peña Nieto's Political Crisis (teleSUR)

We invite you to add your charity or supporting organizations' news stories and coming events to PVAngels so we can share them with the world. Do it now!