Politics and the Economy -- Two Different Animals in Mexico

By some accounts the state of politics in Mexico is in crisis.  Mr. Calderon won the recent presidential election by the thinest of margins and with only a plurality of the vote cast.  Mr. Obrador has been tying up Mexico City with sit-ins and slow downs and is threatening to establish and preside over a parallel shadow government of the Left.  If all one read was the political news,  you would have to conclude that Mexico was not a particularly good place for business investment.

But while politics dominates the news, the business climate in Mexico tells quite a different story.  In Rich Karlgaard's Digital Rules column in the October 16 issue of Forbes he has a blurb entitled "Time to Invest in Mexico?" [a subscription is required to access the on-line edition -- the column appears on page 31 of the print edition currently on the newsstand].  He points out that Mexico had 3.5% GDP growth this past year with a 4% rate projected ahead.  Inflation is at 3%.   Strong increases in consumer credit reflect increased economic activity and consumer confidence.   The Mexican stock market is undervalued as a percent of GDP.

On a similar note, I saw in a recent blurb from Motley Fool that the investment letter service recently had a favorable write up of Mexican cement goliath Cemex, which I understand to be the first non-U.S. stock that the newsletter has recommended recently. 

Obviously the business news paints a very different picture of Mexico from the political news as a place to invest and do business.  This makes me wonder whether the integration of markets and globalization of business has rendered irrelevant the infighting of national politics which seems to have become a blood sport in so many countries around the world -- at least for countries willing to remain engaged in international commerce.