National government is introducing expansionary Mexico economic policy that would deal with fiscal and monetary areas in this time of economic recession when wages are falling, credits and debts are piling up and organizations are firing people.
Economic policy in Mexico initiated by national government has been successful to a certain extent as is illustrated by fact that Mexico’s GDP has expanded by 4 percent in fiscal year of 2008. It was estimated that GDP purchasing power parity was $1.578 trillion, while real growth rate in Mexico was 2 percent. However, this growth can be maintained if problems in housing and credit markets are settled quickly as part of an economic policy at Mexico. If Mexico economic policies are implemented properly rate of growth of national economy could be 0.6 percent by end of 2009. However, this prediction may not be met because of financial crunch and credit crisis.
As per economic policies of Mexico Bank of Mexico, which happens to be an independent central bank, has dropped its interest rate by half a percentage point. Mexico is more focused on making its national economy stable. Fiscal measures, which have been taken, include decrease in energy prices, extra investment in roads, railways and oil wells. It also extends medical cover, welfare assistance and provisional jobs to those who are unemployed. It is expected that this Mexico economic policy will help in prevention of recession.
Government guarantees credit lines and offers loans to small business houses. Stabilization of value of peso has been ensured. This was done after central bank made an expenditure of $15 billion of its reserves.
To reduce social impact of recession, government forwarded some fiscal measures that would save jobs of more than 150,000 people. Steps will be taken to deal with unemployment problems. It has been estimated that public debt is about 30 percent of GDP.
Mexico economic policy is working on basis that if recession continues till 2010, national government will be able to motivate economy. This is so because government saved an amount equal to 1.8 percent of GDP as stabilization funds and these have not been spent. Tax system, labor laws and decline of inequality in income should be taken up by government for development of economy of Mexico. Currency plan and fiscal structure also helps in economic growth of Mexico and contribute to Mexico GDP as well.
With its economy flat lining and being held up by oil and gas exports, Russia desperately needs to increase the scale of those exports. On the face of it the massive $400 billion deal Russia signed with China on 21 May, for a 30 year gas supply contract, looks just the ticket to deliver that increase over the long haul. However, the deal has a number of non-trivial obstacles to overcome, chief of which are disagreements between China and Russia over pricing and the difficulty Russia may find in funding the required pipeline.
Nouriel Roubini, a.k.a. “Doctor Doom”, is chairman of Roubini Global Economics and professor of economics at New York University’s Stern School of Business. Roubini has been consistently cited as one of the world’s top global thinkers. This year, he was voted as the most influential economist in the world by Forbes magazine.
Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. IMF’s Chief Economist from September 2003 to January 2007. Inaugural recipient of the Fischer Black Prize.
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James W. Harpel Professor of Capital Formation and Growth at the John F. Kennedy School of Government in Harvard University. Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research.