Volatility the “great challenge” for emerging markets, says Mexico’s Videgaray
Mexico shows resilience to pressures on global emerging markets, Mexican finance minister Luis Videgaray says
Volatility generated by the end of fiscal stimulus in the US
will be a major test for emerging economies, but Mexico was
doing better than most, the country's finance minister Luis
Videgaray told a LatinFinance event on Thursday.
"That will be the great challenge for EM countries, how we
face that volatility," he said.
The Mexican peso had fallen less than other emerging market
currencies, and the country's credit default swaps remained at
similar level to early 2013, he said.
"International markets are recognizing that the Mexican
economy is stronger than others. That has a lot to do with the
fact that we have better fundamentals."
Mexico is on track to grow nearly 4% this year, he said. The
structural reforms pushed through by the government of Enrique
Peña Nieto would spur growth in the medium term, putting
the country in a sweet spot in the eyes of capital investors,
In the opening speech of LatinFinance's summit on
Mexican debt capital markets in Mexico City, Videgaray said one
of the factors that would underpin growth this year was the
economic recovery in the United States, which led the US
Federal Reserve to announce the gradual end of its quantitative
easing program last year.
"For Mexico that was good news, after all, because it means
that the economy of the US, a country to which we are strongly
linked was starting to grow," Videgaray said.
About 80% of Mexico's exports are to the US, and stronger
growth in the neighboring country would lift Mexico's
prospects, said Videgaray. Foreign investors are excited about
medium-term growth in the Mexican economy on the back of the
Even though Mexican policymakers said the country would need
huge amounts of capital in the next few years to bring economic
growth to 5% to 6%, Videgaray said the Mexican sovereign would
need very little financing for the rest of 2014 compared to
other EM economies.
Mexico last sold foreign bonds in January, issuing $4
billion in a transaction it combined with a liability
management exercise. LF