Dispatch from Mexico – 2015

Dear Friends,

From the patio of a spotless Starbucks in the La Condesa neighborhood of Mexico City, as the luxury cars pass by on the street outside, modern Mexico seems to be thriving. The third largest nation in the Western Hemisphere has one of the fastest growing economies in the region.

When President Enrique Peña Nieto assumed office in December 2012, he was seen as a reformer who would boost Mexico’s economic growth and lessen the country’s economic dependence on the oil industry. After recent political scandals involving the disappearance of a group of 43 students during a shootout in Guerrero last year, the circumstances surrounding how the president and first lady acquired a house from a government contractor at a below-market rate, and the escape of drug lord Joaquin “El Chapo” Guzman from Mexico’s highest security prison, Peña Nieto’s approval rating has declined 20 percentage points, from a high of 55% in 2014. In his third annual presidential report (Informe de Gobierno) in September, Peña Nieto addressed many of these issues citing that these “unfortunate events had caused worry and indignation in Mexican society.”

However, despite these setbacks, he has been praised by business and union leaders for passing a program of eleven structural changes to the constitution that are designed to put Mexico on a path to economic growth. Peña Nieto has been credited for allowing foreign private investment into Mexico’s oil industry for the first time in over a century and breaking up private monopolies in the telecommunications industry, increasing competition in a space long dominated by Carlos Slim’s América Móvil.

Similar to other Latin America countries where economic activity is largely concentrated in major metropolitan areas, the five largest Mexican states represent 45% of the nation’s $1.2 trillion GDP with Mexico City representing 17% of the national economy. Mexico also ranks as one of the most free and fastest growing economies in Latin America, with an expected 2015 growth rate of 3.0%.

Although urbanization of a country, historically, provides economic benefits, half of Mexico’s 122 million people remain under the poverty level due to lack of investment over the last decade in the proper power systems, sanitation and security that would allow cities to fulfill their economic potential.

Mexico’s healthcare system is dominated by two main social security systems IMSS, which covers costs for private sector employees, and ISSSTE, which covers costs for public sector employees in Mexico. The state oil company, the armed forces and the navy each have their own system. Others, including the self-employed, unemployed, non-salaried and informal-sector workers, are covered under one of the Ministry of Health programs, such as the Seguro Popular program or IMSS-Oportunidades, which combined cover approximately 55 million people. Each system has its own independent network of doctors, hospitals, pharmacies, and unions. Healthcare in Mexico makes up 6.2% of GDP, which represents a $77 billion healthcare market.

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