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Viva Reforma en Mexico

August 9, 2012

Mexico was able to quickly turn things around, taking fiscal medicine that included government spending cuts. According to the IMF, Mexico's GDP growth was 5.6% in 2010, and 3.9% in 2011.

-Mark Mobius, Executive Chairman, Franklin Templeton

August 9, 2012

Mexico's close ties to its neighbor to the north can be a double-edged sword. Mexico exports some 80% of all its products to the U.S. and is its largest oil supplier, so the Mexican economy benefits from increasing U.S. demand. On the flip side, however, when the U.S. suffers economic downturns, Mexico tends to suffer in tandem. The 2008 - 2009 U.S. financial market crisis had a ripple effect on Mexico's economy, causing its GDP to sink more than 6% in 2009, the worst contraction there in decades.2

However, Mexico was able to quickly turn things around, taking fiscal medicine that included government spending cuts. According to the IMF, Mexico's GDP growth was 5.6% in 2010, and 3.9% in 2011. This year many countries are struggling to maintain economic momentum, but in its mid-year report, the IMF lifted Mexico's 2012 GDP growth forecast to 3.9%.3 Mexico's growth rate looks to potentially outpace the U.S. this year, and it boasts a lower unemployment rate, too. Mexico's foreign reserves rose to a record of more than US$150 billion this year,4 and its public debt-to-GDP ratio stood at 37.5% in 2011, lower than some of its Latin American counterparts (including Brazil).5

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