Macro Economics of Mexico National and International Economic Analyses

1. Macro Economics of MexicoNational and International Economic Analyses Group 2: Jetske Stortelder Kristian Zuur Joost van Bennekom BuCo-WTM-presentations November 11th 2002

2. Overview • Economic and industrial history • Economic indicators • International position • Energy policy • Conclusions WTM-presentations November 11th 2002 Group 2

3. Economic and industrial history • Past – crisis 1930: Instable & ever changing economic policy • 1930 – WOII: Economy improving measurements by govern. • WOII – 1969: Further econ. develop. & upcoming tourism • 1970: Oil crisis • 1988: Fixing Peso-Dollar rate • 1992: NAFTA • 1994: Peso-crisis • 1994 – present: Other FTA’s & growing internat. dependence WTM-presentations November 11th 2002 Group 2

4. Economic indicators • Gross Domestic Product • Interest rates • Unemployment • Exchange rate • Money supply • Spending power • Inflation WTM-presentations November 11th 2002 Group 2

5. Economic indicators: Gross Domestic Product • GDP in 2001: 617.9 US$ billions • (The Netherlands in 2000: 364.8 US$ billions) • Strong decrease by peso-crisis by the end of 1994 • After 1994: Rescue plan US & strong growth exports by NAFTA • 1997: Asian crisis • 1999: Recovering oil-price • 2000: FTA with EU • 2001: WTC-attack • Forecast 2002 WTM-presentations November 11th 2002 Group 2

6. Economic indicators: Unemployment • Reverse of GDP-trend • Employment divided in sectors: • agriculture 26%, industry 23%, services 51% • Urban/rural • urban unemployment higher • better urban social security and employee benefits • urban areas more dependent of economy • Stable for last few years WTM-presentations November 11th 2002 Group 2

7. Economic indicators: Spending Power • Mexican prices increased much more than US prices which caused an hugh increase when the peso was allowed to float free in 1994 • Spending power = GDP / population = GDP per capita • Mexico: 5.754 PPP US$ • The Netherlands: 25.657 PPP US$ • Unequal distribution: • 20% of population earns 55% of income WTM-presentations November 11th 2002 Group 2

8. International position: FTA’s • NAFTA: North American Free Trade Agreement at end of 1993 with US & Canada • Further lowering of tariffs on trade goods • Aims: expand trade, boost economic growth, net increase in employment in all three countries • Results in five years: doubled commerce between 3 countries, decreased unemployment, more foreign investors • Disadvantages: environmental damage, widening of gap between rich and poor &export dependence on the US • Since 2000: FTA with EU & other countries according to the NAFTA WTM-presentations November 11th 2002 Group 2

9. Energy policy • Natural gas: intention to make this primary fuel • Oil • Abundant reserves, but bad infrastructure • Monopoly by PEMEX over exploration and production • 12% of 1994’s export value • Coal: only small part of energy production • Electricity: • Governmental dominion • Mostly conventional thermalelectricity production • Only few nuclear or alternative non-polluting energy generation WTM-presentations November 11th 2002 Group 2

10. Conclusions • Economic indicators very interdependent • Good investor’s climate: • FTA’s • Most stable economy of it’s region • Eased restrictions on foreign ownership • Slightly changing energy-market • Growing int. dependency, especially of US • Good future prospects WTM-presentations November 11th 2002 Group 2

11. Statement 1 Mexico is too dependent on the US-economy. WTM-presentations November 11th 2002 Group 2

12. Statement 2 Mexico is a developing country. WTM-presentations November 11th 2002 Group 2