Eleven structural reforms were passed by Congress over the first 20 months of the administration of President Peña Nieto, of which six (labor, education, competition policy, financial sector, telecommunications and energy) are focused on the increase of productivity and growth.
With the legislative framework related to the structural reform agenda largely in place, attention will now shift to implementation to bring these reforms into action. Several regulatory agencies have been established or reformed.
The political cycle will start to focus on the mid-term elections in July 2015 that will renew the lower house of Congress, 9 State Governors and 17 local Congresses as well as numerous city councils and mayors.
Economic activity is showing signs of recovery from the cyclical downturn experienced over the past two years. Economic growth fell to 1.1 percent in 2013 and a weaker than expected first quarter in 2014 postponed the expected economic recovery and led to a downward adjustment of growth projections for the year to about 2.5 percent. More recent economic data show that a recovery, led by strong manufacturing exports and public spending, is underway. A pick-up in domestic demand should raise growth next year to about 3.5 percent.
Private investment, particularly in infrastructure and the energy sector, may enhance economic growth in the not-too-distant future, though productivity effects will likely become evident only over the course of several years.
Mexico’s fundamentals, policy framework and macroeconomic management have allowed the country to deal with financial volatility related to the timing of exit from unprecedented accommodative monetary policies in major advanced economies. Mexican financial markets have been able to cope with changing investor sentiment without mayor liquidity pressures or the need for public intervention.