• 5 minutes Iran Says It Arrested 17 CIA Spies, Some Sentenced To Death
  • 9 minutes Will We Ever See 100$+ OIL?
  • 13 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 2 hours Iran Loses $130,000,000 Oil Revenue Every Day They Continue Their Games . . . .Opportunity Lost . . . Will Never Get It Back. . . . . LOL .
  • 10 hours Oil Giant Saudi Arabia Is Set to Start First Wind-Power Plant
  • 4 hours How is E&P of Marginal Oil on the UKCS Similar to the Shale Oil Operations in the US?
  • 4 mins Renewables provided only about 4% of total global energy needs in 2018
  • 7 hours So You Think We’re Reducing Fossil Fuel? — Think Again
  • 5 hours Berkeley becomes first U.S. city to ban natural gas in new homes
  • 8 hours EIA Reports Are Fraudulent : EIA Is Conspiring With Trump To Keep Oil Prices Low
  • 5 hours N.Y. Governor Signs Climate Bill
  • 20 hours First limpet mines . . . . now fly a drone at low altitude directly at U.S. Navy ship. Think Iran wanted it taken out ? Maybe ? YES
  • 19 hours Today in Energy
  • 15 hours Which is a better domain name for OAPEC?
  • 3 hours U.S. Administration Moves To End Asylum Protections For Central Americans
  • 13 hours Shale Oil will it self destruct?
Alt Text

Russia’s Oil Output Rebounds From Three-Year-Low

Russia’s oil production in the…

Alt Text

Russian Crude Could Still Be Dirty By Mid-2020

Polish refiner PKN Orlen has…

Alt Text

Libya’s Oil Revenue Takes A Beating

Libya’s oil revenue fell significantly…

Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

More Info

Premium Content

Lagging Oil Industry Weighs On Mexico’s Economy

Amid declining oil, agricultural, and industrial production, as well as an impending radical regime change, Mexico’s economy contracted more than previously projected in the second quarter, according to Mexico’s national statistics institute. Though just a 0.1 percent contraction was estimated for gross domestic product, the numbers now show that Mexico’s GDP declined at double the rate, down 0.2 percent from the previous quarter in seasonally adjusted terms.

Some service sectors, such as commercial activity, transportation, financial and media grew just 0.2 percent from the previous quarter, compared with a 1 percent expansion in the first quarter. Industrial sectors including mining, construction and manufacturing actually declined by 0.3 percent, while agriculture, livestock and fishing industries showed even bigger signs of trouble, with a 2.1 percent decrease.

In spite of the second-quarter stall, Mexico’s economy is still projected to expand more rapidly this year than in 2017, thanks to accelerated spending before the July 1 presidential election. The economy is expected to increase by 2.2 percent this year and 2.1 percent in 2019, according to analysts in a survey released by Citigroup Inc. That being said, nothing is certain and the trajectory over the coming year will be a rough one. The International Monetary Fund (IMF) recently downgraded its forecast for Mexico’s growth financial growth in 2019, reportedly due to trade tensions and current political instability concerning the North American Free Trade Agreement (NAFTA) and the leftist president-elect’s coming policy shift.

Incoming Mexican president Andres Manuel Lopez Obrador (locally known as AMLO) further catalyzed economic concern this month when he announced his plans to hold a public referendum over whether to cancel the upcoming $13 billion (that’s USD, not pesos) construction of a new international airport for Mexico City, the country’s capital and largest metropolitan area by far. The project was the biggest infrastructural undertaking of sitting president Enrique Pena Nieto, and AMLO has stated that on top of pressing environmental concerns, the planned airport is far too expensive and entangled in many layers of corruption.

Related: The Next Major Challenge For Norway’s Oil Industry

Another reason for wavering confidence in the future of the Mexican economy is the review of oil contracts. AMLO has promised to check over already-awarded contracts for telltale signs of corruption and has also raised eyebrows by appointing an industry newcomer to lead the state-owned oil company Petroleos Mexicanos (Pemex), the largest oil producer in the country. The president-elect will also halt any new oil auctions for the next two years. Serious change, however, could be what Pemex needs, as they are currently over $100 billion in debt after 13 consecutive years of declining output, widespread and violent fuel theft, and international corruption scandals.

AMLO, the first leftist president Mexico has elected in decades, has also promised expanded spending on social programs for marginalized communities such as the elderly and youth, in addition to a major investment of 75 billion pesos ($4 billion) in the oil industry, to be financed through increased government efficiency and a crack-down on institutional corruption. Some critics and economists, however, doubt that this will really be possible without reaching into the pockets of Mexican taxpayers.

Despite the discouraging discourse, some experts are saying that things are not as bad as they look for the Mexican economy. Bill Adams, senior economist at PNC Financial Services Group told Bloomberg that employment growth is steady and healthy in Mexico, and that this quarter’s stall is just the result of a particularly strong first quarter.

Overblown or not, the concerns over the Mexican economy are worth paying attention to in the coming months, especially once all of incumbent president Lopez Obrador’s political shifts begin to transform from campaign trail pledges to concrete legislation. Change is what an absolute majority of what Mexicans voted for, and it is certainly what they will get. Now we’ll find out if it’s what they bargained for.

By Haley Zaremba for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play