Perhaps taking note of this, Mexico’s central bank (Banxico) revised up its economic growth forecast for the year by a quarter of a point to 4.25% on 16 May. The bank explained that its decision reflects the fact that there is more encouraging economic data currently coming out of the US, which is stimulating Mexico’s economy.
According to Banxico, Mexico’s economy has returned to the path of economic growth as its flexible exchange rate policy helped it absorb some of the effects of the external volatility. Banxico points out that between April and May the over 9% appreciation of the peso observed in the first quarter has been wiped out; and Banxico president, Agustín Carstens, said that eventually there may be other “corrections in the exchange rate”.
MEXICO | Promoting “antidote” trade agreement with Uruguay. On 10 May Mexico’s deputy foreign trade minister, Francisco de Rosenzweig, said that Mexico was keen to continue expanding its commercial relations with Uruguay as an “antidote” to the global economic crisis. De Rosenzweig, who headed Mexico’s delegation that attended the IV meeting of the administration committee of the Mexico-Uruguay Free Trade Agreement (FTA) held in Montevideo, said that in the last couple of years the 2004 agreement has contributed to the “remarkable increase in bilateral trade which now stands at US$500m. He added that “open” trade relations are the best “antidote” to the international crisis.
During the negotiations Mexico approved a Uruguayan petition to include a new quota of 5,000 tonnes of powdered milk a year, currently valued at US$40m, to enter the Mexican market tariff free. Uruguay’s deputy economy and finance minister, Luis Porto, said that the negotiations were a priority for Uruguay and that “we have made progress”. Porto highlighted his country’s necessity to diversify markets and products for export in order to achieve greater economic integration between the region’s countries as a way to “counteract the increasing protectionist trend”.
Both Uruguay and Mexico have recently been involved in trade disputes with Brazil and Argentina as the two largest South American economies have sought to impose trade barriers in order to protect their domestic markets. While Mexico is able to deal with its South American partners separately in addressing the disputes, Uruguay’s situation is much more complex as both Brazil and Argentina are its fellow partners in the Southern Common Market (Mercosur) customs union and the removal of the barriers must be negotiated among all the parties involved.
MEXICO | New double taxation agreement signed. Mexican authorities announced on 14 May that they had signed a double taxation and tax evasion agreement with the Arabian Gulf State of Qatar. A statement from the finance ministry (SHCP) stated that the agreement signed in Mexico City by Mexico’s deputy finance minister, José Antonio González, and Qatar’s director of public revenues at the ministry of economic and finance, Moftah Jassim Al Moftah, is the first tax agreement signed between the two nations and that it would help to “harmonise the two countries’ fiscal systems, and provide legal certainties for Mexican and Qatari investments” as it establishes a more equal bilateral tax system which eliminates discriminatory treatment of foreign-based taxpayers.
The SHCP explained that the agreement establishes a “maximum tax rate of 5%-10% for rents and 10% for royalties” to be paid to the State by nationals from both countries. As a result the SHCP stated that it could help promote bilateral business as investors can now expect to obtain higher profit levels.
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