Mexico - Updating report on the economy

Report No. 1110-ME An Updating Report on - X the Economy of Mexico March 23, 1976 Latin America and the Caribbean I Department 0 9Th/Ti? FOR OFFICIAL USE ONLY RETURN TO RETUN T 1L.. &C. FILES Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Unit - Peso (Mex$) US$1.00 = Mex$12.5o Mex$1.00 = US$0.08 Mex$1 million = US$80,000 Fiscal Year - January 1 to December 31  FOR OFmFCIAL USE ONLY This Report is based mainly on the findings of two missions which visited Mexico in July/August 1975 and in January 1976. The first mission was led by Ian Scott and included Juan Villarzu, Thomas Hutcheson and Peter Scherer. The second mission consisted of Alexandre Nowicki, Ian Scott and Juan Villarzu. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   TABLE OF CONTENTS Page SSMARY AND CONCLUSIONS i I. RECENT TRENDS 1 A. A Profile of Change: 1973-75 1 1. Background 1 2. Developments in 1973 3 3. Developments in 1974 4 4h Developments in 1975 8 B. The Past as Epilogue 17 1. The Role of the Public Sector 17 2. The Role of the Private Sector 21 3. The Role of External Forces 22 4. Conclusions 23 C. The Past as Prologue 24 1. Introduction 24 2. Social Development 24 3. Economic Development 25 II. FUTURE PROSPECTS 27 A. The 1976 Economic Program 27 1. General Characteristics 27 2. Public Finance 28 3. Balance of Payments 32 4. Money, Credit and Prices 34 5. Conclusions 36 B. The Way Ahead 36 1. The Objectives of Economic Policy 36 2. The question of Feasibility 37 3. Conclusion 44   Page 1 of 2 pages COUNTRY DATA - IIEXICO AREA 2/ POPULATION DENSITY 1,972,547 kfr- 574.lTmillion (mid-1972) 36.4 per kmaJ/ Rate of Growth: 3.4 (from 1961to 1970) per kmV/of arable land POPULATION CHARACTERISTICS (1970) HEALTH (197O) Crude Birth Rate (per 1,000) 46 Population per physician 1,440 Crude Death Rate (per 1,000) 8 Population per hospital bed 810 Infant Morta:!iy (per 1,000 live births) 61 INCOME DISTRIBUTION (1979 DISTRIBUTION OF LAND OWNERSHIP C970) % of national income, hest quintile 64 . owned by top 10% of owners 37.1 lowest quintile 6 7 owned by smallest 10% of owners 0.3 ACCESS TO PIPED WATER (1970) ACCESS TO ELECTRICITY (1970) % of population 49 % of population 59 NUTRITION (1970) EDUCATION 4a97Q) Calorie intake as % of requirements 110 Adult literacy rate % 84 Per capita protein intake 65 Primary school enrollment % 71 1/ GNP PER CAPITA in 1972 : US $750 GROSS NATIONAL PRODUCT IN 1974 ANNUAL RATE OF GROWTH (7. constant prices) US $ Mln. 7. 1960-65 1965-70 197h GNP at Market Pri es 65,032 100.0 7.1 6.9 5.9 Gross Domestic Investment 13,896.0 21.4 6.5 7.0 6.5 Gross National Saving 11,010.0 16.9 7.1 4.6 1.2 Current Account Balance 2,886.0 4.4 0 2 19,8 38.5 Exports of Goods, NFS 6,063.7 9.3 3.5 4.0 4.1 Imports of Goods, NFS 1,763.6 11.9 2.2 8.o 19.0 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1970 Constant Prices 2/ Value Added Labor Force7 V. A. Per Worker US$Mln. 7 Min. 7. US % Agriculture 4.0 12.9 5.1 39.2 789.2 33-0 Industry 10.4 33.6 3.0 23.1 3,471,8 145.2 Services3/ 16.6 53.5 4.9 37.7 3,396.2 142.0 Total/Average 31.0 100.0 100.0 100.0 GOVERNMENT FINANCE _General Government i Central Government. / (Mex$ Mln.) 7 of GDP (Mex$ Mln.) % of GDP 1974 1974 1970-74 l92 IL7J 197-74 Current Receipts 94.9 11.7 11.5 70.1 8.6 8.3 Current Expenditure 84.9 _ 10.5 9.4 65e 8.1 . Current Surplus 10.0 1.2 2.1 4.6 0.5 0.8 Capital Expenditures 64.8 8.0 6.7 29.7 3.7 3.1 External Assistance (net) 25.6 3.5 1.2 14.6 1.8 0.5 1/ The Per Capita GNP estimate is at 1970 market prices, calculated by the same conversion technique as the 1972 World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 2/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. 3/ Includes unallocated labor force / Consolidated public sector 5/ Federal government 6/ Includes the deficit financing of the target non-budgetary controlled public sector enterprises. Not available Not applicable  Page 2 of 2 pages COUNTRY DATA - MEXICO MONEY, CREDIT and PRICES 1965 1970 1971 1972 197 3 197h (billion Mex$outstanding end period) Money and Quasi Money 71.0 160.3 184.4 217.4 245.3 289.1 Bank Credit to Public Sector 40j0 79.0 90.2 112.0 143.6 177.5 Bank Credit to Private Sector 48.3 115.5 130.1 144.5 160.8 201.2 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 28.2 38.3 40.8 72.4 39.6 35.6 General Price Index (1963 = 100) 67.8 80.7 84.3 89.0 100.0 123.8 Annual percentage changes in: I/ General Pricr Index 2.3 4.5 4.5 5.6 12.4 23.8 Bank credit to Public Sector .. 8.9 14.2 24.2 28.2 23.6 Bank credit to Private Sector .. 22.0 12.6 11.1 11.3 25.1 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1970-74) 196N 1970 1974 US $ Min % (Millions US $) Cotton 100.4 7.3 Cattle 120.2 8.7 Ixports of Goods, NFS 1,902.1 23745, 4 6,6 63.6 Sugar 74.2 5.4 Imports of Goods, NFS -2,081.2 -3,416.9 7,763. Petroleum 22.1 1.6 Resource Gap (deficit = -) -179.1 -671.5 -1699 Manufactures 478.5 34.8 Interest Payments (net) -111.9 -307.0 908.5 All other commodities 579-5 42.2 Workers' Remittances 75.7 122.7 158.1 Total 1,374-9 lQOO Other Factor Payments (net) -144.6 -267.5 549.1 Net Transfers -5.7 55.3 113.4 EXTERNAL DEBT, DECEMBER 31, 1974 Balance on Current Account -365.6 1,068.0 -2-,oSh.O US $ Mln Direct Foreign Investment 213.9 322.8 878.1 Net MLT Borrowing 0.8 258.6 2,427.0 Public Debt, incl. guaranteed 8,013.b Disbursement 370.5 821.3 2,968.Ei Non-Guaranteed Private Debt Amortization 9 -562.7 -54i.8 Total outstanding & Disbursed 8 S.ma l' 2,/ Capital Grants - - - DEBT SERVICE RATIO for i9h4- Other Capital (net) 129.0 588.6 -12.2 7 Other items n.e.i - Increase in Reserves (+) --=2. -102.1 -36. Public Debt, incl. guaranteed 18.0 Non-Guaranteed Private Debt - Gross Reserves (end year) 560.0 816 1,440 Total outstanding & Disbursed Net Reserves (end year) RATE OF EXCliANGE IBRD/IDA LENDING, (latest month) (Million US $): Through - 1971 IBRD IDA US $ 1.00 = Me$ 12.5 MeoX$ 1.00 US $ o.o8 Outstanding & Disbursed - Undisbursed Since - 1971 Outstanding incl. Undisbursed US $ 1.00 Mex$ 12.5 iex$ 1.00 = US $ 0.08 1/ SDP Implicit Deflator 2/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. not available not applicable March 23, 1976  r JUAN 141 S w_ e ~ ~ ~ ~ ~ ~ ~ ~ AW c-- n0/ OF MEX\ICO < r'sn5_i te. V u 0 ar-