PARTICIPANTS
Pedro Aspe, Michael Boskin, John Gunn, Matthew Gunn, Stephen Haber, Mary O’Grady, Gary Roughead, John Shoven, George Shultz, John Taylor, Pablo Villanueva, Ian Wright
ISSUES DISCUSSED
Pedro Aspe met with the Working Group to discuss the current state of the Mexican economy relative to Latin America and the rest of the world, economic trends that have been developing in Mexico, and the economic impact the new Mexican executive administration is seeking to have.
Aspe began by describing Mexico’s current public debt and deficit. While Mexico has public debt and deficit significantly less than many countries, he argued that the deficits of recent years are trends that should be quickly changed with good policies, especially in the context of prevailing high oil prices and low interest rates.
Aspe then discussed various macroeconomic indicators in Mexico and stated that while the U.S. has not yet recovered to pre-crisis levels in employment and production, Mexico has. Additionally, since the crisis Mexico is the only Latin American country whose currency has appreciated relative to 2009 levels, which, in tandem with global transportation and labor costs rising, has allowed Mexico to maintain global competitiveness and export (to the United States in particular) more than all other Latin American countries combined.
Pertaining to policy, Aspe stated that because Mexico is such an open economy and has such a large degree of imports and exports, they should begin to take advantage of more trade agreements such as the Trans Pacific Partnership. Aspe also argued that structural changes from 1985-1994 resulted in impressive growth in the Mexican economy, but that fewer recent reforms has led to stalled growth. Although Mexico’s economic performance has been improving relative to other countries, there are still many policies that can be enacted to lead to additional growth, including energy reform, education reform, reform of government spending, and strengthening trade relationships with emerging economies.
Aspe concluded by commenting that the recent pact of commitments made by the government in Mexico should lead to increased growth and productivity, and that the general feelings is that current Mexican leadership is moving the country in a direction beneficial for growth.
