This week in Mexico – Feb 29, 2020

This Week in Mexico

February 22, 2020 to February 28, 2020

Recruiters in Mexico See Nervousness

This week went from bad to worst with the rapid spread of the coronavirus increased fears of a pandemic on Friday, with six countries reporting their first cases and the World Health Organization (WHO) raising its global spread and impact risk alert to very high. World shares fell again, winding up their worst week since the 2008 global financial crisis and bringing the global wipeout to $6 trillion. 

Executive search firms and headhunters in Mexico began to feel the impact and nervousness in both clients and candidates. As we write this post, many are bracing for the impact on travel and disruption in day to day activities similar to what we saw with the H1N1 virus in 2009. As in 2009, the biggest fear is the compounding effect on an already fragile economy. 

Source

Infinet Wireless delivers state-wide wireless public security network in Mexico

Summary

ñ Infinet Wireless, the global leader in fixed broadband wireless connectivity, has successfully installed a new high-capacity wireless infrastructure to improve public safety and expand its geographical coverage in the Zacatecas state, located in north-central Mexico. Infinet Wireless has provided connectivity to around 150 locations in numerous municipalities in the state, further enabling the local authorities and law enforcement agencies to provide dynamic monitoring of the streets and neighborhoods, emergency care wherever it is needed, enhanced citizen protection, and connecting the REPUVE public register of vehicles with all relevant command and control centres. Infinet Wireless was selected to deliver the project following a decision from the Executive Secretary of the State Public Security System (SESESP), which is responsible for citizen safety and security in the entire state, with the main objective being a major technological overhaul and renewal to ensure the safety of residents and visitors to the region. “SESESP required a solution which could address the limitations of the legacy wireless platform we had, make more efficient use of the limited radio spectrum available, mitigate radio interference generated by third party and rogue base stations, as well as significantly improve the reliability of our camera feeds even in the highest density locations,” said Jaime Francisco Flores Medina, Executive Secretary of the SESESP of Zacatecas state. “These were critical criteria for SESESP, and Infinet Wireless was able to provide a reliable solution which met and exceeded our expectations, as well provide much easier installation and maintenance.” One of the key challenges faced by SESESP was to ensure that its subsidiary, The Center for Integral Coordination, Control, Command and Communications (C5), could have access to dynamic and comprehensive visibility at the street level, enabling quick decision-making on all matters related to public safety, medical emergencies, the environment, civil protection, fluidity of road traffic and the provision of various services to the community at large. Gathering and sharing real-time information from a multitude of sources presented a real challenge, especially as the collected information needed to be subsequently distributed to various monitoring and control centres spread across the state.

Mexico’s central bank downgrades 2020, 2021 growth forecasts

Summary

The central bank of Mexico (Banxico) on Wednesday downgraded its growth forecasts for 2020 and 2021, citing slower than expected recovery in domestic demand and U.S. industrial activity. Gross domestic product (GDP) is now expected to expand between 0.5 and 1.5 percent this year, less than the 0.8 to 1.8 percent previously forecast, according to the bank’s report on last year’s fourth quarter results. Banxico lowered its 2021 growth forecast to between 1.1 and 2.1 percent, from the previous 1.3 to 2.3 percent. In 2019, Mexico’s GDP shrank 0.1 percent, marking the first contraction in a decade, mainly due to a slowdown in global economic growth. The central bank’s governor Alejandro Diaz de Leon cited “marked uncertainty” for the downgrade. “Worsening trade tensions” in the medium term and “a slowing down in global trade and the world economy” in the short term were among the risks facing Mexico, he said. However, he added, the final ratification of the United States-Mexico-Canada Agreement (USMCA) could help grow the economy if it generates greater than expected investment

Terrafina Signs Binding Agreement for the Construction Expansion in Coahuila

Summary

Terrafina (TERRA) (BMV: TERRA13), a leading Mexican industrial real estate investment trust (FIBRA), externally advised by PGIM Real Estate and dedicated to the acquisition, development, leasing, and management of industrial real estate properties in Mexico, announced today the signing of a binding agreement for the construction of a 122,000 square feet expansion in Coahuila. The expansion project will be developed for a tenant focused in electrical equipment assembly for industrial operations as well as industrial automation. We estimate a total investment of US$6.2 million (excluding taxes), which will generate a development yield over stabilized net operating income (NOI) of approximately 10.4%. We expect construction will last 6 months and we will start collecting rents on the new space two months later. Finally, the new lease was signed for a 10 year-term. Alberto Chretin, Terrafina’s CEO, commented, ìWe are very pleased to announce a new expansion project in line with our development strategy, which allows us to strengthen our tenants’ operations and promote more growth in the manufacturing for export activity in Mexico. Improving our clients’ operations like this provides more stability and long-term visibility to Terrafina’s portfolio

Leaders: 2020 forecast is rosy for border trade with Mexic

Summary

Border trade leaders are expressing optimism for the 2020 trade forecast with Mexico ó especially at the busy Santa Teresa Port of Entry in New Mexico ó following the new free trade agreement. Thatís because port officials, which have long lacked the ability to process hazardous materials, expect that to change by the end of 2020., the Las Cruces Sun-News reported. Adding a hazmat containment site could increase the portís volume of traffic by 20 percent ó from 600 trucks per day to 720.ìBy piecing together that hazmat capability, weíre going to get a lot more traffic and be able to attract a lot more prospects, Jerry Pacheco, president of the New Mexico-based Border Industrial Association. The general optimism comes after the uncertainties governing the specifics of the United States-Mexico-Canada Agreement ó which replaces the North America Free Trade Agreement ó have been ironed out, U.S. Senator Martin Heinrich, D-NM, said. ìI think, now that we have a level of certainty as to what the regulatory environment looks like, that will provide more confidence in long-term investments and the potential for growth in this particular port of entry, Heinrich told the Sun-News. ìI think it means more economic activity. I think it means more volume, and we need to plan for that. And the sooner, the better.î Marco Grajeda, executive director of the New Mexico Border Authority, said he believes that having a finalized version of the agreement will only benefit the state’s ports of entry.

Microsoft announces $1.1 billion investment in Mexico

Summary

Microsoft announced a five-year, $1.1 billion investment plan in Mexico on Thursday to develop training programs and increase the availability of cloud computing services. Company executives said the money will be used to establish a regional data center, as part of a program Microsoft calls ìInnovating for Mexico.î Some of the money will be used to help monitor endangered species.President Andres Manuel Lopez Obrador said the investment showed the confidence investors have in Mexico following the ratification of the U.S.-Mexico Canada free trade agreement.

WHO raises global risk of coronavirus from ‘high’ to ‘very high’

Summary

The rapid spread of the coronavirus increased fears of a pandemic on Friday, with six countries reporting their first cases and the World Health Organization (WHO) raising its global spread and impact risk alert to very high. World shares fell again, winding up their worst week since the 2008 global financial crisis and bringing the global wipeout to $6 trillion. Hopes that the epidemic that started in China late last year would be over in months, and that economic activity would quickly return to normal, have been shattered. WHO chief Tedros Adhanom Ghebreyesus said his organization was not underestimating the risk. “That is why we said today the global risk is very high, he told reporters in Geneva. “We increased it from high to very high” WHO spokesman Christian Lindmeier said the scenario of the coronavirus reaching multiple or all countries is something we have been looking at and warning against since quite a while. Switzerland joined countries banning big events to try to curb the epidemic, forcing cancellation of next week’s Geneva international car show, one of the industry’s most important gatherings. Tedros said mainland China had reported 329 new cases in the last 24 hours, the lowest there in more than a month, taking its tally to more than 78,800 cases with almost 2,800 deaths.

Weak economy fuels smallest Mexican current account deficit since 1995

Summary

Mexico posted its smallest current account deficit in 24 years during 2019 as sluggish investment crimped spending on capital goods even as the U.S. trade dispute with China supported exports, official data showed on Tuesday. Mexico’s current account deficit narrowed to $2.444 billion from $23.004 billion a year earlier, the central bank figures showed. It was the smallest deficit since 1995, when Mexico suffered a severe recession, the data showed. The current account deficit was equivalent to 0.2% of gross domestic product (GDP), the smallest since Mexico ran a surplus in 1987, according to central bank data.Aside from the January-March period, Mexico ran up current account surpluses in all remaining quarters as businesses reined in investment on plant and equipments, curbing the outflow of dollars from Latin America’s second-biggest economy.”These figures are consistent with an economy that isn’t growing”, said Benito Berber, chief Mexico economist for bank Natixis. “When there’s economic contraction youíre obviously importing less,” he added. Mexican firms have been unsettled by President Andres Manuel Lopez Obrador’s economic policies, helping to push the country last year into its first recession in a decade.

Hawks have upper hand as Mexico central bank paces rate cuts

Summary

Mexico’s central bank cautioned against steering monetary policy toward helping the countryís stagnant economy, even as tension on its board over how much further interest rates should fall became apparent in a report published on Thursday. Minutes of the Bank of Mexico’s last rate-setting meeting on Feb. 13 suggested that most of its five-member board was wary of easing borrowing costs to encourage growth. “(The majority) indicated that the benefit of using monetary policy to reactivate the economy would be modest, and that the risk of doing so could be high,” the bank said. Still, the minutes also showed some board members felt the current policy stance was still very restrictive, reflecting differences of opinion that have been evident at the bank since it began cutting rates in August. “The minutes present an argument duel between a hawkish majority … and a dovish minority,” Goldman Sachs economist Alberto Ramos said in a note to clients. The board unanimously voted to cut its benchmark interest rate by 25 basis points to 7.0% at its last meeting.

Mexico’s Economy Contracted 0.14 percent Last Year

Summary

Mexico’s economy registered a 0.14 percent contraction in 2019, according to seasonally adjusted figures released by the National Institute of Statistics and Geography (INEGI). In Q4 last year, the country’s economy contracted 0.4 percent at an annual rate, the sharpest fall in 2019. In Q1 the figure was 0.0 percent, in Q2 it rose by 0.1 percent while in Q3 it contracted by 0.2 percent. The GDP drop in last year’s fourth period completed two consecutive quarters of economic contraction, thus meeting the technical definition of a recession. “You don’t need a Committee to define if last year there was a recession. Classifying it as a recession or stagnation does not change reality,” Moody’s Analytics consulting director Alfredo Coutio said, quoted by El Economista. The specialist warned that the definition is irrelevant when data disclosed by INEGI show that private consumption, encouraged by government transfers and remittances, was the only thing that limited a deeper decline during 2019. The 2019 result matches estimated projections published by INEGI last January and also by analysts, and also represents the first contraction since the 2009 global economic crisis. INEGI statistics show that industrial sector (or secondary activities) registered an annual drop of 1.9 percent, triggered mostly by the 5.1 percent plunge in mining. Only in the October-December period of 2019 the industrial sector registered a negative variation. The 1.2 percent drop on the previous quarter was affected by poor automotive industry results and a slow-paced construction sector. This was the fifth negative consecutive quarter result for the industrial sector.

Hackers Attack PEMEX Again and Threat the NOC

Summary

It is believed Hackers behind PEMEX’s cyber-attack last November struck again yesterday, after uploading a site on the Web where they threatened to disclose the NOC’s sensitive information they allegedly have. The Dopple Leaks site is hosted in the so called “Dark Web” for sites unknown by regular internet users who are linked to search engines such as Google. The web tens to have web pages related to illegal activities, like selling drugs or weapons. The web page was allegedly created by PEMEX hackers after the Mexican Government rejected to pay the US$5 million (MX$95.4 million) ransom they demanded. Then, the NOC reported that only 3,000 computers of their 60,000 units were affected, without giving more details on the case. For five years PEMEX will not disclose any information related to the hacking arguing national security concerns. Andres Velazquez, president of Mattica cybersecurity company, confirmed that PEMEX attackers published the Dopple Leaks site, according to Reforma. The specialist said they were able to confirm the existence of the site, but not the authenticity of the information regarding PEMEX hackers claim to have. This was the second high-profile cyber-attack on the President Lopez Obrador administration. Early this week the Ministry of Economy (SE) was also hacked, an attack that today is also affecting administrative procedures for tomato exports to the US. The peak of tomato production and exports from Sinaloa, the county’s main producer, occurs in February and March. SE is responsible for responding to requests sent by producers electronically, so cargo can leave the country and is not waiting long hours at the border. After the attack that hampered networks and servers belonging to the Ministry’s computer systems, the agribusiness sector informed the Foreign Trade office that the product could not wait until the system was restored, since tomatoes are highly perishable. SE had to establish alternate and complementary mail system to continue foreign trade operation.