1. Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University International Business Forum

2. Recent Economic and Political Events World economic weakness World economic weakness Mexican government gridlock Mexican government gridlock Mexico – U.S. relationship Mexico – U.S. relationship Iraq war and aftermath Iraq war and aftermath

3. Mexico’s Reaction Peso’s debacle? Peso’s debacle?

4. Exchange Rate Pesos per U.S. Dollar Source: Banco de México www.banxico.org.mx

5. Exchange Rate Pesos per U.S. Dollar Source: Banco de México www.banxico.org.mx

6. Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight?

7. Foreign Direct Investment Billions of Dollars Source: Banco de México www.banxico.org.mx

8. Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight? Economic crisis? Economic crisis?

9. Real GDP % Change Source: Banco de México www.banxico.org.mx

10. Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight? Economic crisis? Economic crisis? Fiscal crisis? Fiscal crisis?

11. Government Balance Balance / GDP Source: SHCP www.shcp.gob.mx

12. Mexico’s Reaction Peso’s debacle? Peso’s debacle? Capital flight? Capital flight? Economic crisis? Economic crisis? Fiscal crisis? Fiscal crisis? Inflationary spiral? Inflationary spiral?

13. Inflation Source: Banco de México www.banxico.org.mx

14. Term Risks Short Structural Challenges Risks and Challenges

15. Super Peso Super Peso

16. Inflation Differential vs. Exchange Rate Inflation Exchange Rate 305 214 Source: Banco de México www.banxico.org.mx

17. Merchandise Trade Billions of Dollars Source: Banco de México www.banxico.org.mx Imports Exports

18. Why Super Peso? Foreign investment Foreign investment Family remittances Family remittances

19. Family Remittances Billions of Dollars Source: Banco de México www.banxico.org.mx

20. Super Heroes

21. Super Peso Super Peso U.S. economy U.S. economy Mexican politics Mexican politics Term Risks Short

22. China China Rule of law Rule of law Human capital Human capital Infrastructure Infrastructure Fiscal reform Fiscal reform Poverty Poverty Structural Challenges

23. A Tale of Two Surprises? Economic stability is not a surprise Economic stability is not a surprise Super Peso Super Peso June 17 th, 2002 June 17 th, 2002

24. Source: Proceso, June 23, 2002 Pg. 41

25. Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University International Business Forum

26. Mexico and the Super Peso A Tale of Two Surprises International Business Forum www.trinity.edu/jgonzal1 jorge.gonzalez@trinity.edu