Mexico – can reform crack the productivity bottleneck

Mexico’s reform agenda has progressed swiftly over the past year with legislation passed restructuring a number of key sectors.  To raise economy-wide productivity still requires more effort to address the less glamorous areas, such as labour-market deregulation and removing red tape from small businesses.  But if these are tackled effectively, the positive impact on trend growth — currently stuck in the 2-3% range — should be considerable.  We remain positive on reform momentum and would be long Mexico financial assets and the peso.

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