Finance and Strategy Practice

September 2012

Mexico Economic Digest
Monthly Dashboard of Leading Mexico Economic Indicators

Executive Summary
Featured Leading Indicators: 1. Country Risk Indicators ................................ 3 2. Trade & Exchange Rate Indicators ............... 4 3. Consumer S ti 3 C Sentiment .................................... 5 t 4. Business Environment and Production ......... 6 5. Income, Price & Employment Indicators ....... 7 6. Financial Indicators ....................................... 8 7. Foreign Investment Indicators ...................... .9 8. The Economy in the News ........................... 10 9. Glossary ....................................................... 11

September 28, 2012
The Mexican economy expanded at a slower rate of 4.1% in Q2 2012. However, economists expect its GDP to grow by 3.8% in 2012. Country risk, as indicated by the CDS spread, decreased by 19 bps in the last 30 days. Growth in exports and imports slowed down in July with exports expanding by 8 7% and imports by 5 8% YoY; the trade deficit widened in July to 8.7% 5.8% $618. Business sentiment appeared favorable even as the business confidence index declined to 107 in August from 107.5 a month ago. Industrial production registered a higher growth of 4.8% in July. Meanwhile, consumer confidence remained below the neutral 100 point mark at 97.6. Outstanding consumer loans rose by 22.7% in July while retail sales expanded by 5.6% in June. Inflationary pressure increased as the consumer price indexed rose by 4.6% YoY in August. The unemployment rate increased to 5.0% in July. Other highlights include: g p y y g g  The BOLSA index declined by 0.4% in the last 30 days.  The Mexican Peso strngthened against the U.S. Dollar by 3.5% and weakened against the Euro by 2.8% in the last 30 days. Mexico recorded a decline in remittances of 2.1% in July on YoY basis.

Mexico Real GDP, YoY %
12.0 8.0 4.0 0.0 -4.0 -8 0 8.0 -12.0 Actual GDP, 6/30/2012, 4.1 High Est; Q4 2012: 3.9; FY 2012: 4.6 Med Est; Q4 2012: 3.4; FY 2012: 3.8 Low Est; Q4 2012: 1.0; FY 2012: 2.6

Jun-08

Jun-09

Jun-10

Jun-11

Mar-08

Mar-09

Mar-10

Mar-11

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Mar-12

Jun-12

Sep-12

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

© 2012 The Corporate Executive Board Company. All Rights Reserved.

2

Country Risk Indicators
Mexico’s gross domestic product is expected to grow by 3.8% in 2012, slightly slower compared to 3.9% achieved in 2011. Country risk declined as the credit default swap spread decreased by 19 bps to 92.7 in the last 30 days.

Country
Actual 2011 GDP Growth Rate (%) Estimated 2012 GDP Growth Rate (%) Bond Rating Credit Default Swap Spread
1

Mexico
3.9 3.8 BBB 92.7

Russia
4.3 3.8 BBB 138.5

Brazil
2.7 1.9 BBB 109.6

India
6.5 6.5 BBBNA

China
9.2 7.9 AA79.3

United Australia Kingdom
0.7 -0.4 AAA 43.1 2.3 3.6 AAA 47.3

Credit Default Swap Spread
700 600 500 400 300 200 100 Average; 149 4 149.4 Credit Default Swap; 9/13/2012; 92 7 92.7
The credit default sw ap spread declined by 19 0 19.0 bps in the last 30 days.

May-08

May-09

May-10

May-11

May-12

Jan-08

Jan-09

Jan-10

Jan-11

Mar-08

Mar-09

Mar-10

Mar-11

Jan-12

0

Mar-12

Jul-08

Jul-09

Jul-10

Jul-11

Nov-07

Nov-08

Nov-09

Nov-10

Nov-11

Sep-08

Sep-09

Sep-10

Sep-11

Jul-12

1 2012 GDP forecasts are the median estimated growth rates from Bloomberg survey of economists except for India, where the median estimates from Reserve Bank of India survey of professional forecasters are used.

Sep-12

© 2012 The Corporate Executive Board Company. All Rights Reserved.

Sources: Corporate Executive Board research.

3

Trade & Exchange Rate Indicators
Mexican exports increased by 8.7% in July while imports rose by 5.8% on a year-on-year basis. Oil exports fell by 16.9% in July