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Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University San Antonio Business and Economics Society.

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Presentation on theme: "Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University San Antonio Business and Economics Society."— Presentation transcript:

1 Mexico and the Super Peso A Tale of Two Surprises Jorge G. Gonzalez Trinity University San Antonio Business and Economics Society

2 The events of 2001 and 2002 Economic weakness in U.S. Mexican government gridlock Mexico – U.S. relationship Crisis in Argentina Winds of war

3 Mexico’s Reaction 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? Capital flight?

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

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

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

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

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

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

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

14 Term Risks Short Structural Challenges Risks and Challenges

15 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 Family Remittances

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

20 Super Heroes

21 Super Peso U.S. economy War in Iraq Mexican Politics Term Risks Short

22 China Rule of Law Human Capital Infrastructure Fiscal Reform Poverty Structural Challenges

23 A Tale of Two Surprises? Economic stability is not a surprise Super Peso 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 San Antonio Business and Economics Society

26 Mexico and the Super Peso A Tale of Two Surprises www.trinity.edu/jgonzal1 jorge.gonzalez@trinity.edu San Antonio Business and Economics Society

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