INTERNATIONAL

FINANCE
MEXICO
Group 9
Alice Maheshwari – 07
Karan Kumar – 25
Harsh Thakkar – 55
Devansh Vaghela - 57
 Political Risk
Mexico political risk
• Political risk in Mexico is low
• But Mexico’s governance indicators relative to the
regional average are mixed
• Regulatory quality and government effectiveness are
the only two categories where Mexico ranks above
the regional average
• Political stability and control of corruption are
notably below the Latin American average. 
Mexico Expropriation risk
• The risk of expropriation in Mexico is
low to moderate
• Mexico has a history of natural
resource expropriation over the last
century, and it remains a popular
policy, often mentioned during
election cycles across Latin America
• No terrorism threats as such, attacks
can be ruled out
• Cyber security threats have increased
over the past 5 years
Governance Risk

• Mexico is ranked 54 out of a possible 190 economies on the World Bank’s ease of doing business
scorecard, and well above the Latin America and Caribbean average of 112
• Mexico outperforms most of Latin America and the Caribbean in all categories though getting
electricity is slightly harder in Mexico due to its electricity sector being largely under state-control
Economic Risk

• The Mexican economy expanded 2.2% in 2018 driven by robust exports, solid household consumption
stronger services sector growth
• Growth is expected to range between 2% to 3% over the next five years
• Low unemployment, strong remittances and recovering real wages will support household spending
• Investment will be supported by greater public investment.
• Recent structural reforms are expected to boost private investment, adding further upside to the outlook.
• Growing US protectionism from the Trump Administration remains the largest risk
• Mexico’s GDP per capital reached US$9,600 in 2018, and should approach US$12,000 by 2022.
Financial Risk

• Financial Risk – Moderate to High

• Mexico is highly internationally
integrated in finance and trade
Fiscal Risk
• Mexico is highly dependent on
foreign trade, which represented
77.6% of its GDP in 2017
• Mexico's trade balance is
structurally negative, a trend
that has been accentuated by
the slowdown of the U.S.
economy and the decline in
world oil prices
• Mexico’s trade deficit narrowed TRADE DEFICIT(IN USD MILLION)
to USD 1117 million in July 2019 
Monetary Risk
INFLATION RATE
• Mexico's annual inflation rate fell
to 3.78 percent in July 2019 from
3.95 percent in the previous
month
• That was the lowest rate since
December 2016 mainly due to a
slowdown in energy inflation. 

MONEY SUPPLY
• Mexico’s Money Supply M1 was
reported at 228.139 USD bn in
Jul 2019
• This records an increase from
the previous number of 226.857
USD bn for Jun 2019
 External Sector Risk
Slide 4Current account deficit
Trade openness FDI as % of GDP
to GDP

73/165 86/170 94/181

The country is a net borrower from the rest of Trade openness refers to the outward or
the world inward orientation of a given country's
economy.

4
 External Sector Risk
Slide 4
Long-term Interest Short-term Interest FII (in mn dollars)
Obligation Obligation

44/114 9/152
61/115 Higher the risk, higher the returns