Carstens: Financial Reform to Boost Mexico's Growth The News
go to original February 14, 2013

Banxico’s Carstens says it is an ‘encouraging process’ (The News)

MEXICO CITY – Sweeping reforms are changing Mexico’s economic outlook, said Bank of Mexico (Banxico) Governor Agustín Carstens in his 2012-13 Inflation Report this week.

Carstens said that Banxico is maintaining its growth forecast of 3 to 4 percent for 2013. That may change as structural reforms are passed and implemented, he added.

The Banxico governor said that the central bank had predicted between 500,000 and 600,000 new jobs in 2013. After the passing of the labor reform, that prediction has raised by 50,000. Carstens said that depending on the reform’s impact, the forecast now stands at 700,000-800,000 new jobs for 2014.

Carstens said that the passing of reforms was an “encouraging process,” which could counter external market risks. “Given that there are still vulnerabilities (in the global economy), it is very important to continue on this path of reform.”

When asked about the possibility of an increase to the valued added tax, Carstens said that “it will have an impact, but its (immediate) impact will be short-lived, and will change over time relative to prices.”

In a press conference, Carstens said, “(The public) should not assume that I’m advocating for an increase in VAT ... it would impact all sales prices at once but afterwards this effect would gradually shrink over time.”

The leftist Democratic Revolution Party (PRD) has claimed that the Institutional Revolutionary Party’s (PRI) fiscal reform would increase the VAT, a claim the PRI denies.

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