Mexico’s Strengths

1

2

Economic relationMexico-United States-Canada

$525 billions of dollars in 2016

Mexico

$266 billions of dollars in

2016United States

United States

Canada

3

• NAFTA paved the way for the current economic ecosystem inborder cities by allowing US companies to send material toproduction plants in Mexico for assembly and return, usuallywithout paying taxes as final products with lower prices.

Mexico- United StatesEconomic relationship

• Leaving NAFTA could paralyze trade and causerecession in border communities.

• US exports have been increased by 454%. Raisingtaxes could trigger a commercial warfare as well aswreak havoc on the production chains.

• Mexico has cut production costs down 4% thanchina and japan.

NAFTA

Source: SHCP (Secretary of finance and public credit)

Economic relationship Mexico-USA

4Source:SHCP

NAFTA brought strong economic integration

5

Texas grew faster than the national average even before the recession of 2008

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• 2016 Mexico-Texas trade: $173.7 billion USD

• Since the beginning of NAFTA,exports from Texas to Mexico grew 355%

(1994-2016)

Texas is Mexico’s main trade partner

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Canciller Luis Videgaray Caso, Mayo 2017

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The number of jobs that depend

on trade in Texas:

0%

5%

10%

15%

20%

25%

1992 2014

3,150,600

Job creation from 1992 to 2014 has increased 82%

These jobs related to trade grew 1.5 times faster than other economic activities

source: http://www.usglc.org/texas/facts-figures/

BORDERPLEX : JUAREZ-EL PASO-LAS CRUCES

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United States-Mexico Border map

10Source: Border Industrial Association

Importance of Mexico in the Border States

• Mexico is the 3rdmost important trade partner for the U.S

• Mexico is vital for the border bilateral trade.

9.20

BIL

LIO

NS

USD

26.8

0 B

ILLI

ON

S U

SD

1.70

BIL

LIO

NS

USD

92.5

BIL

LIO

NS

USD

ARIZONA CALIFORNIA NEW MEXICO TEXAS

EXPORTS TO MEXICO

11Source: census.gov

• It is the world's 14th economy

• Receives 35 million tourists a year

• 15 million Americans visit Mexico

• 1st place in the aerospace industry

• 4th place as automotive producer

How’s Mexico doing today?

12Source: SECTURhttp://www.gob.mx/cms/uploads/attachment/file/196065/4_11_Informe_de__Logros_Turismo_2016.pdf

Public Debt, 2016(% of GDP)

Source: Fiscal Monitor, April 2016. *For Mexico HBPSBR Precriterios 2017, SHCP.

Low debt level47.9%

75.9% of total federalgovernment debt is in pesos.

13

114.6107.5

98.292.389.1

76.368.2

51.449.347.9

37.319.818.4

0 50 100 150

Advanced G20USA

FranceCanada

UKBrazil

GermanySouth Africa

ColombiaMexico*

KoreaChile

Russia

Strong and prudent public debt management

Excluding the Oil Sector, the Mexican economy has grown at arate of over 3% since the end of 2014.

• Over the last years the Mexican economy reduced its exposure to the oil industry.

• Oil activities account for only 6.3% of GDP.

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Non-Oil GDP and Oil GDP(Annual growth, %)

Source: INEGI.*Extraction of oil and gas, mining-related services and oil and coal byproducts.** INEGI 1Q16 Flash GDP Estimate. Oil and Non-Oil breakdown not available.

1.11.9 1.7 1.3

2.5 2.02.6

3.3 3.2 3.2 3.5 3.1

-0.4 -0.9 -0.5 -0.4 0.0-0.8

-1.8

-6.0-6.2

-9.1

-7.4

-5.4

1.01.7 1.6 1.1 2.3 1.82.3 2.6 2.5 2.3 2.8 2.5

2.7**

I II III IV I II III IV I II III IV I

Non-Oil GDP Oil GDP* Total GDP

2013 2014 2015 2016

Structural Reforms have contributed to the strengthening ofOf the performance of key sectors in the Mexican economy.

Energy

Education

LaborLegal

Finance

Telecomm

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Strengthen theinstitutional environment topromote competitionand investment

Promotecompetition andbetter conditionsfor financing

Encouragecompetitionand investment

Improve productivityand boost investment

Improve human capital

BoostAnd IncreaseProductivity

Promote flexibilityand formality

ImmigrationImmigration from Mexico to the US has provided the workforce needed tosupport economic growth of key sectors in the US over the last two decades:Construction, Agricultural and Services, among others.

o However, migration from Mexico to the US has declined since 2005. Infact, since 2009, more Mexicans have returned to Mexico than migratedto the US.

Bordero Nearly 1,000,000 people and 370,000 vehicles legally cross the border

daily.

o More than $1 billion worth of goods pass through the 42 border crossingsevery day ($ 52 million an hour).

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Immigration and Border

Janet Yellen: Immigration

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“…curbing immigration could hurt the growth of the world's largest economy.”

Chair of the Federal Reserve Bank

18THANK YOU