IMF Economic Review for Mexico

On December, 3, 2007, the Executive Board of the International Monetary Fund (IMF) gave the following report regarding Mexico’s economy, which is quite positive:

“The economic expansion has continued albeit slowed by developments in the United States. Growth is projected to be close to 3 percent for 2007 with inflation closer to 4 percent. Mexican financial markets have weathered recent global financial volatility well. Commercial banks remain well capitalized, profitable and liquid, and nonperforming loans are still low. Executive Directors commended the improvements in macroeconomic and financial policies that have helped Mexico to reduce significantly external and internal vulnerabilities over the years-with sustained low inflation, a declining public debt ratio, and a reduction in external debt to low levels. 

“They also welcomed the recent reform breakthroughs, including on tax policy and public pensions, as essential, forward-looking steps to addressing longer-term challenges. Directors considered that Mexico’s near-term outlook remains solid. They observed that Mexican markets have weathered the recent global volatility well, owing to Mexico’s healthy fundamentals.

“Directors considered the independently floating exchange rate regime as appropriate and serving Mexico well, and the real effective exchange rate as broadly in line with fundamentals. They noted that this transparent regime has facilitated continuous and smooth adjustment to shocks, thus contributing to internal and external stability. Directors also noted that the level of international reserves appears adequate, and saw no immediate need for a change in the non-discretionary rule governing the accumulation of reserves. Directors welcomed the recent tax policy and public pension reforms as key to addressing long-term fiscal challenges.”
 I doubt that the IMF report for the United States itself, was as positive.

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