The Mexican peso has hit a two-year high of 12 to the US dollar. “We are on the eve of Mexico’s reform moment”, says Morgan Stanley, a bank. Analysts reckon Mexico could be among the world’s largest ten economies by 2020 as a series of structural reforms raise the economy’s speed limit.
New president Enrique Peña Nieto “has set a furious pace” since he took office in December, says The Economist. He’s loosened the labour market, taken on the teaching unions and shaken up telecoms and TV, sectors dominated by a handful of powerful firms. A beefed-up regulator and two new free-to-air TV channels are the main elements of this reform.
The next project will be to realise the potential of Mexico’s oil and gas sector. Governments have traditionally milked the profits of Pemex, the state-owned oil and gas monopoly, so it hasn’t invested enough in deep-water technology to bolster its reserves. “It is not clear how ambitious” Pena plans to be.
Privatising the group may be off the table, but a positive step would be to turn it into a state-owned group capable of entering alliances with private firms. With the reform agenda heading in the right direction, the peso has further upside, says Morgan Stanley.