Mexico

FOOTBALL IN MEXICO There is a long football tradition in Mexico, participating in 11World Cups and hosting two (1970 and 1986). Expectations among local fans are never below making it to second round but most importantly, they like to see “good football”. According to the most recent FIFArankingMexico is 7th place, ranked higher than Germany and England. Mexico has generated great football players, including the memorable Hugo Sanchez, that have gone on to play with theworld’s leading professional teams. THE STATE OF THE ECONOMY After five years of strong real GDP growth, the Mexican economy experienced a recession in 2001, along with the US economy. Real GDP contracted 0.2%, reflecting a sharp contraction in the manufacturing export sector which is extensively exposed to the US. Macroeconomic management has been fairly prudent since the lastWorld Cup; the government has had relatively low fiscal deficits while the Central Bank has achieved its inflation targets for the last 3 years in a row. The nominal fiscal deficit has declined to 0.8% of GDP in 2001 from 1.3% of GDP in 1998. Furthermore, the broader definition of the fiscal deficit -which include certain “off-balance sheet” expenditure items has also declined to 4% of GDP from 6.3% of GDP in 1998, reflecting the government’s continuous efforts to control fiscal expenditure and allow for a further reduction in real interest rates. The Central Bank has had a stellar performance in reducing and limiting inflation within its inflation target, gaining a good deal of credibility in the process. Inflation is down from 18.6% in 1998 to 4.4% in 2001. Strong capital inflows—particularly Foreign Direct Investment—and booming exports strengthened the Peso in recent years. Asa result both unit labour costs and the real exchange rate have continued on an appreciating trend, reflecting the pace at which the Mexican economy is converging to the US after the NAFTA arrangement. It is important to emphasize however that convergence towards theUSstandard in soccer might not be as desirable. The “Super Peso” has allowedMexican fans to travel all over the world to support the “tricolour”. In fact, we expect an unusually high proportion of Mexican “Sombreros” in the Japanese and Korean stadiums this year. The main challenge for the current administration is to implement deeper structural reforms to speed up macroeconomic convergence with the United States. Reforms that could provide the right incentives to attract investment in those sectors that could help boost Mexico’s productivity and competitiveness will likely be required in following years. In particular, the government and congress likely will need to approve further reforms in the electricity sector. It will also require significant investment in coming years to boost generating capacity to a level that could satisfy increasing domestic demand, thus avoiding electricity rationing problems that could affect economic activity, and, most importantly, the proper illumination of soccer fields thus reducing Mexico’s football potential. The World Cup and Economics 28 World Cup 2002 THE 2002 WORLD CUP Mexico has traditionally been the powerhouse within the CONCACAF qualifying region. However, the “tricolour”, as the team is known, had a tough road getting to the 2002 World Cup, finishing second below Costa Rica in the qualifying round. While not a true contender for theWorld Cup title, Mexico aspires to go beyond the first round. Qualifying could be quite challenging for the “Tricolour” in this cup because it shares the G group with Italy, Croatia and Ecuador.National coach Javier “Vasco” Aguirre’s best offensive weapons are Cuauhtémoc Blanco and Francisco Palencia (both playing in the Spanish league). Cuauhtémoc is a consistent and experienced goal scorer with excellent shooting ability, who is also known for his peculiar dribbling style “Cuauhtémiña” (where he rests the ball on both feet and skips opponents by jumping). Other important players are: goalkeeper Oscar “El Conejo” (the rabbit) Perez, defenseman Rafael Marquez, midfielder Tomás Campos and striker Joaquín Reyes. Mexico is rated at 100 - 1 to lift the World Cup in 2002. STATE OF THE NATION Mexican politics have undergone a drastic transformation process since Vicente Fox from the PAN was elected president in July 2000. President Fox’s victory ended the 71 years of PRI monopoly of power. Mr. Fox’s “Alliance for Change” has brought a necessary change to the executive branch that can only improve democratic institutions in Mexico. However, political diversity has also brought new challenges. The official coalition won a simple majority in the lower house of congress while the PRI remained the largest force in the Senate.Without an absolute majority in Congress, President Fox has struggled to convince opposition parties in Congress to support his reform agenda. In December 2001 Congress passed a disappointed fiscal reform that had little to do with Fox’s original proposal. President Fox will have to find ways to negotiate effectively with opposition parties PRI and PRD in order to pass an energy reform that would open up the sector to private investment and boost productivity. Previous Appearances: 11 1930, 1950, 1954, 1958, 1962, 1966, 1970, 1978, 1986, 1994, 1998 Honours Hosts: 1970, 1986