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2016: Complicated Macroeconomic Outlook

October 19, 2015
2016: Complicated Macroeconomic Outlook

The domestic economy is currently of maximum importance for Mexico. The Department of Finance and Public Credit or Hacienda presented the 2016 economic package, including the Income Law and Spending Budget, the tax policy framework for 2016, during a difficult time for Mexico given the low price of petroleum (and decreased production of crude oil) and concern over the global economy. In this regard, it is projected that public spending will exceed income, resulting in an increase in the public account deficit. The government will be required to make an effort to reduce spending for economic and political reasons. It is unacceptable for the country to witness increased public spending while it is plagued by so many problems resulting from a lack of financial resources. This is one of the reasons why the federal government cancelled the Grito de la Indepencia celebration for special guests on September 15th. A dangerous spiral could result if the deficit and public debt increase, which could lead to distrust from domestic and foreign investors and dissuade them from investing in Mexico. It is hoped that the measures adopted by the Department of Finance and Public Credit, as well as controls exercised by the Bank of Mexico, fulfill their purpose while taking advantage of the positive outlook for the U.S. economy, which is closely related to the economy of Mexico.

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