Elevated vulnerability in the wake of the outcome of the US presidential decision
The deficit was cut down by 1.1% of GDP from 2015 to 2016
Ken research announce its recent publication on “ Consumer Payments Country Snapshot: Mexico 2016“ which concentrates on offering insightful analysis of consumer payments market in Mexico, considering payment cards, online payments, P2P payments and latest payment technologies such as mobile wallets and contactless along with the regulations enforced in the market and how they have evolved. Furthermore, it has explored the online payment market in the UK by payment tool along with its five year future forecast for the development of the market. This report offers an in-depth analysis of the consumer attitudes towards prepaid cards, mobile payment tools, P2P tools and the process of deployment constructed by the companies in Mexico. Learn the latest trends which drive consumer behaviour at the macro level and plan the respective strategies further.
Mexico – Economic forecast
Financial movement has been versatile to sharply bring down oil costs, powerless world trade development and money related policies fixing in the United States. Domestic demand remains the fundamental driver of monetary activity, upheld by late auxiliary changes that have sliced costs to buyers, eminently on power and telecoms services. Development will be kept down in 2017 and 2018, for the most part through venture and buyer confidence, following uncertainties about future US strategy, in spite of the fact that the economy could profit by more grounded import demand from the United States.
Macroeconomic factors are being fixed. Banco de Mexico raised policy rates to counter inflationary weights and keep expansion expectations secured close to the inflation target and all the more as of late because of elevated vulnerability in the wake of the outcome of the US presidential decision. Keeping in mind the end goal to meet the union way and guarantee debt sustainability, the 2017 budget plan incorporates expenditure cuts, with the goal of coming back to an essential surplus.
The government laid down a consolidation path two years back to lessen the budget deficit by 2 percentage points of GDP more than 4 years. However, there is degree for reallocating expenditures and further constraining tax expenditures to rise spending on projects helpful for comprehensive development for Mexican families – such as child care, wellbeing, poverty reduction, and infrastructure.
Financial activity held back by external factors
Even being hit by major external shocks, the Mexican economy has been versatile. The external environment is a task, with the global economy remaining in a low-growth trap and poor expectations degrading trade, investment, and salaries. Headwinds specific to Mexico incorporate reducing oil prices, which had cut down government receipts, cutbacks in power sector investments, and the heavily depreciating Mexican peso following market expectations of US Federal Reserve fixing, and policy uncertainty in the United States.
The government is on right path to meet its Public Sector Borrowing Requirements (PSBR) deficit target. The deficit was cut down by 1.1% of GDP from 2015 to 2016; however this largely reflected a one-off profit remittance from the central bank. The loss of budget revenue following the eradication of global oil prices posed a threat and an opportunity for Mexico, which it conveniently met by implementing a reform to raise taxes by 3% of GDP since 2014, thereby majorly reducing fiscal dependence on oil.
Certain reforms are needed for the country’s economic and financial growth
- Misallocation of productive resources,
- stringent local regulations,
- weak legal institutions,
- high rates of corruption
- Insufficient financial inclusion
- Eradicating extreme poverty,
- reducing income inequality and informality,
- Raising female participation, and encouraging more responsible business practices.
The outlook is linked to external developments
The expansion of the Mexican economy is anticipated to be affected by policy uncertainties in the United States. However, the economy will continue to be accepted by a competitive exchange rate, solid credit expansion, and continual improvements in the labour market included by the government’s structural reforms and the low inflation environment.
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Ankur Gupta, Head Marketing & Communications
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