Secretary of finance Luis Videgaray Caso explains his strategy to make Mexico grow at six percent. The effects of the labor reform, the transformation of Pemex, his view on controls on banking and the fiscal reform.
In the alternate office of the Secretariat of Finance, on Julio Verne Street, in the Polanco area of Mexico City, Luis Videgaray Caso has a fill day: natural for the person at the helm of the world's 14th biggest economy.
Cordially, the secretary of finance gives precise answers to Latin Trade's questions, with no political gimmicks. He seems to have the peace of mind of someone whose actions have been endorsed by the international and domestic markets, and of someone who knows this is Mexico's Moment.
The country's success has long been compared with Brazil's, but these Latin American countries differ fundamentally in their path to prosperity. "Mexico is more open than Brazil. Mexico derided to open up to trade and that was the right decision," the secretary said. According to the World Trade Organization, the international trade to GDP ratio for Mexico is 61 percent, whereas for Brazil it is just 23 percent. Also, import tariffs average 8 percent in Mexico and almost 14 percent in Brazil.
Mexico and Brazil also differ in their export structure. Almost 70 percent of Mexican exports are manufactured goods; almost 65 percent of Brazil's exports are agricultural and mineral products. Mexico's strength in manufactured goods also sets Mexico apart from the rest of Latin America, a region that is strongly regressing towards commodities.
Although Mexico's path has been different, its development strategy shares characteristics with the rest of the region--Mexico is working hard on productivity. "Over the last 30 years, productivity fell 0.7 percent. In this context, growth becomes very difficult," Videgaray stressed.
Faster growth is crucial for a government that had as a campaign promise, to grow GDP at a rate three times higher than the 1.9 percent it posted on the last few years. The government will strive to achieve 5-6 percent growth rates by the end of its six-year term, Videgaray said.
The key for accelerating GDP growth hinges on reducing informality, increasing competition and lowering operative costs for businesses, according to the secretary. The government is also promoting better access to credit, lower energy prices and improvements in education to boost the economy. The idea is to have these measures help every...