EX-1

EX-1 2 d904059dex1.htm EX-1 EX-1

Exhibit 1

RECENT DEVELOPMENTS

The information in this section supplements the information about Mexico corresponding to the headings below that is contained in Exhibit D to Mexico’s annual report on Form 18-K, as amended, for the fiscal year ended December 31, 2013 (the “2013 Form 18-K”). To the extent that the information included in this section differs from the information set forth in the 2013 Form 18-K, you should rely on the information in this section.

The Economy

Gross Domestic Product

The following tables set forth the composition of Mexico’s real GDP by economic sector, in constant 2008 pesos and in percentage terms, for the periods indicated.


	Real GDP by Sector
	2009		2010		2011		2012		2013		2014⁽¹⁾
	(in billions of constant pesos)⁽²⁾
Primary Activities:
Agriculture, forestry, fishing, hunting and livestock⁽³⁾	Ps.	383.2	Ps.	386.1	Ps.	377.2	Ps.	405.3	Ps.	409.1	Ps.	420.7
Secondary Activities:
Mining		1,012.1		1,021.0		1,017.2		1,026.4		1,025.4		1,002.1
Utilities		255.8		267.4		286.0		292.1		293.6		298.8
Construction		968.2		975.5		1,015.1		1,040.0		990.3		1,009.6
Manufacturing		1,857.9		2,016.7		2,109.3		2,194.3		2,218.4		2,301.1
Tertiary activities:
Wholesale and retail trade		1,563.5		1,749.0		1,919.1		2,010.6		2,057.4		2,126.2
Transportation and warehousing		650.0		700.1		728.4		758.0		777.5		793.1
Information		352.0		355.3		371.1		431.6		453.1		463.2
Finance and insurance		403.9		488.6		523.3		563.4		618.6		631.2
Real estate, rental and leasing		1,464.0		1,504.5		1,548.5		1,587.2		1,603.1		1,637.4
Professional, scientific and technical services		274.5		274.2		288.3		291.4		294.8		299.2
Management of companies and enterprises		68.2		71.8		74.4		80.8		79.4		84.5
Administrative support, waste management and remediation services		370.8		373.4		395.7		412.9		430.7		430.5
Education services		473.0		473.9		481.3		492.0		495.9		503.4
Health care and social assistance		255.2		254.9		260.3		265.9		272.5		274.3
Arts, entertainment and recreation		55.0		57.3		56.9		58.5		60.6		60.1
Accommodation and food services		251.1		255.9		259.8		273.9		279.0		286.9
Other services (except public administration)		254.1		256.7		261.5		270.0		274.9		278.7
Public administration		467.4		478.8		472.1		489.5		488.8		501.1

Gross value added at basic values		11,379.9		11,961.2		12,445.4		12,943.8		13,123.2		13,402.0
Taxes on products, net of subsidies		300.8		316.5		328.8		342.3		347.8		355.2

GDP	Ps.	11,680.7	Ps.	12,277.7	Ps.	12,774.2	Ps.	13,286.2	Ps.	13,470.9	Ps.	13,757.2

Note: Numbers may not total due to rounding.

(1)	Preliminary figures.

(2)	Based on GDP calculated in constant 2008 pesos.

(3)

GDP figures relating to agricultural production set forth in this table and elsewhere herein are based on figures for “agricultural years,” with the definition of the relevant “agricultural year” varying from crop to crop based on the season during which it is grown. Calendar year figures are used for the other components of GDP.

Source: Instituto Nacional de Estadística y Geografía (National Institute of Statistics and Geography, or INEGI).

Real GDP Growth by Sector

(% change against prior years)⁽¹⁾


	2009			2010			2011			2012			2013			2014⁽²⁾
GDP (constant 2008 prices)		(4.7	)%		5.1	%		4.0	%		4.0	%		1.4	%		2.1	%
Primary Activities:
Agriculture, forestry, fishing, hunting and livestock		(2.5	)		0.8			(2.3	)		7.4			0.9			2.8
Secondary Activities:
Mining		(4.0	)		0.9			(0.4	)		0.9			(0.1	)		(2.3	)
Utilities		1.3			4.5			6.9			2.1			0.5			1.8
Construction		(6.1	)		0.8			4.1			2.5			(4.8	)		1.9
Manufacturing		(8.4	)		8.5			4.6			4.0			1.1			3.7
Tertiary activities:
Wholesale and retail trade		(12.5	)		11.9			9.7			4.8			2.3			3.3
Transportation and warehousing		(7.2	)		7.7			4.0			4.1			2.6			2.0
Information		8.5			1.0			4.4			16.3			5.0			2.2
Finance and insurance		3.4			21.0			7.1			7.7			9.8			2.0
Real estate, rental and leasing		1.1			2.8			2.9			2.5			1.0			2.1
Professional, scientific and technical services		(5.0	)		(0.1	)		5.1			1.1			1.2			1.5
Management of companies and enterprises		(8.2	)		5.3			3.5			8.6			(1.8	)		6.4
Administrative support, waste management and remediation services		(7.0	)		0.7			6.0			4.4			4.3			0.0
Education services		0.2			0.2			1.6			2.2			0.8			1.5
Health care and social assistance		2.0			(0.1	)		2.1			2.1			2.5			0.7
Arts, entertainment and recreation		(4.1	)		4.1			(0.7	)		2.9			3.4			(0.8	)
Accommodation and food services		(9.6	)		1.9			1.5			5.4			1.8			2.8
Other services (except public administration)		(0.6	)		1.0			1.9			3.3			1.8			1.4
Public administration		2.0			2.4			(1.4	)		3.7			(0.1	)		2.5

Note: Numbers may not total due to rounding.

(1)	Based on GDP calculated in constant 2008 pesos.

(2)	Preliminary figures.

Source: INEGI.

According to preliminary figures, Mexico’s GDP increased by 2.1% in real terms during 2014 as compared to 2013. This increase was primarily due to an increase in tertiary activities, mainly wholesale and retail trade.

Prices and Wages

Consumer inflation (as measured by the change in the national consumer price index) for the first two months ended February 28, 2015 was 3.0%, 1.2 percentage points lower than during the same period of 2014. This was due to a decline in the price of processed foods, housing, fruits and vegetables and other services, and a decline in the cost of energy and authorized government rates.

Interest Rates

On April 1, 2015, the 28-day Cetes (Mexico’s Federal Treasury certificates) rate was 3.0% and the 91-day Cetes rate was 3.2%.

Employment and Labor

According to preliminary figures, Mexico’s unemployment rate was 4.3% as of February 28, 2015, a 0.3 percentage point decrease from the rate during the same period of 2014.

Principal Sectors of the Economy

Manufacturing

The following table sets forth the change in industrial manufacturing output by sector for the periods indicated.

Industrial Manufacturing Output Differential by Sector

(% change against prior years)⁽¹⁾


	2010			2011			2012			2013			2014⁽²⁾
Food		1.7	%		2.2	%		2.6	%		0.2	%		0.9	%
Beverage and tobacco products		0.6			4.6			2.6			0.6			4.8
Textile mills		10.9			(4.4	)		3.1			(3.2	)		(3.3	)
Textile product mills		2.5			(2.9	)		(0.1	)		3.7			5.8
Apparel		4.6			0.2			(0.5	)		3.3			(3.5	)
Leather and allied products		7.7			(0.7	)		3.5			1.0			(1.4	)
Wood products		5.5			5.1			13.0			(2.8	)		1.2
Paper		3.7			(0.8	)		4.8			2.2			3.2
Printing and related support activities		10.0			4.2			(4.1	)		(7.0	)		(2.4	)
Petroleum and coal products		(7.2	)		(3.6	)		1.1			3.2			(4.5	)
Chemicals		(0.4	)		(0.1	)		(0.3	)		2.4			(0.4	)
Plastics and rubber products		13.5			6.7			9.0			(1.2	)		5.3
Nonmetallic mineral products		4.7			3.7			2.3			(2.9	)		2.2
Primary metals		12.4			4.3			2.2			(0.2	)		9.5
Fabricated metal products		8.8			7.0			3.9			(5.4	)		8.4
Machinery		47.2			13.3			5.3			1.6			(3.0	)
Computers and electronic products		3.7			6.7			0.5			4.2			5.8
Electrical equipment, appliances and components		10.1			(1.1	)		1.8			(3.7	)		6.3
Transportation equipment		42.2			16.6			14.1			5.4			11.5
Furniture and related products		7.1			1.2			2.8			(6.0	)		(1.8	)
Miscellaneous		1.9			5.1			0.4			1.3			7.0
Total expansion/contraction		8.5			4.6			4.0			1.1			3.7

(1)	Percent change reflects differential in constant 2008 pesos.

(2)	Preliminary figures.

Source: INEGI.

According to preliminary figures, the manufacturing sector expanded by 3.7% in real terms during 2014 as compared to 2013. This expansion was primarily due to an increase in the manufacturing of primary metals and transportation equipment sectors. In total, eight manufacturing sectors contracted during 2014, while 13 sectors expanded during 2014, each as compared to 2013.

Tourism

Mexico’s tourism sector expanded in 2014. As compared to 2013, this sector experienced increases in the following areas:

•

revenues from international travelers (including both tourists and visitors who enter and leave the country on the same day) totaled U.S. $16.3 billion, a 16.6% increase from 2013;

•

revenues from tourists to the interior (as opposed to border cities) totaled U.S. $13.6 billion, a 19.9% increase from 2013;

•

the number of tourists to the interior totaled 16.0 million, a 9.6% increase from 2013;

•

the average expenditure per tourist to the interior totaled U.S. $850.00, a 9.4% increase from 2013;

•

expenditures by Mexican tourists abroad totaled U.S. $6.2 billion, a 7.2% increase from 2013; and

•

expenditures by Mexicans traveling abroad (which include both tourists and one-day visitors) totaled U.S. $9.7 billion, a 5.8% increase from 2013.

In total, the Mexican tourism sector recorded a U.S. $6.6 billion surplus in the balance of payments in 2014, a 36.8% increase from the U.S. $4.8 billion surplus recorded in 2013.

Electric Power

In 2014, 260,137.9 gigawatt hours of electricity was generated in Mexico, an increase of 0.6% as compared to 2013 (and an overall increase of 7.3% since 2010). Mexico exported 2,652.7 gigawatt hours of this electricity in 2014, as compared to 1,240.1 gigawatt hours in 2013. As of December 31, 2014, installed generating capacity was 54,366.9 megawatts, an increase of 0.6% from 2013. Domestic energy generation in 2014 was further supplemented by imports of electricity totaling 2,124.0 gigawatt hours.

Financial System

Central Bank and Monetary Policy

At February 28, 2015, Mexico’s M1 money supply was 14.2% greater in real terms than the level at February 28, 2014. The amount of bills and coins held by the public was 15.4% greater in real terms than at February 28, 2014. In addition, the aggregate amount of checking account deposits denominated in pesos was 12.6% greater in real terms than on the same date in 2014.

At February 28, 2015, financial savings — defined as the difference between the monetary aggregate M4 and bills and coins held by the public — were 8.2% greater in real terms than financial savings at February 28, 2014. Savings generated by Mexican residents increased by 7.3% and savings generated by non-residents increased by 14.7%, both in real terms, as compared to the same period of 2014.

At April 1, 2015, the monetary base totaled Ps. 1,069.4 billion, a 0.6% nominal increase from the level of Ps. 1,062.9 billion at December 31, 2014.

The Securities Markets

The Bolsa Mexicana de Valores (BMV) publishes the Índice de Precios y Cotizaciones (Stock Market Index, or the IPC) based on a group of the 35 most actively traded shares.

At April 1, 2015, the IPC stood at 44,203 points, representing a 2.5% increase from the level at December 31, 2014.

Banking Supervision and Support

At January 31, 2015, the total loan portfolio of the banking system was 0.7% lower than the total loan portfolio at December 31, 2014. According to preliminary figures, at January 31, 2015, the total amount of past-due commercial bank loans (excluding those banks undergoing government intervention and those in special situations) was Ps. 92.3 billion, as compared to Ps. 91.3 billion at December 31, 2014. Moreover, the past-due loan ratio of commercial banks was 2.8%, the same as at December 31, 2014. The amount of loan loss reserves held by commercial banks at January 31, 2015 totaled Ps. 114.2 billion, as compared to Ps. 115.6 billion at December 31, 2014. As a result, commercial banks had reserves covering 124% of their past-due loans, well exceeding the minimum reserve level of 10.5%.

External Sector of the Economy

Foreign Trade

According to preliminary figures, during the first two months of 2015, Mexico registered a trade deficit of U.S. $2.7 billion, as compared to a trade deficit of U.S. $2.3 billion for the same period of 2014. In particular, exports increased or decreased as follows, each as compared to the first two months of 2014:

•

petroleum exports decreased by 47.1%;

•

non-petroleum exports increased by 4.8%;

•

merchandise exports decreased by 2.2%, to U.S. $56.3 billion, as compared to U.S. $57.5 billion during the first two months of 2014; and

•

exports of manufactured goods (which represented 87% of total merchandise exports) increased by 4.6%.

According to preliminary figures, during the first two months of 2015, total imports decreased by 1.4%, to U.S. $58.9 billion, as compared to U.S. $59.8 billion for the same period of 2014. In particular, imports increased or decreased as follows, each as compared to the first two months of 2014:

•

imports of intermediate goods decreased by 1.0%;

•

imports of capital goods increased by 2.8%; and

•

imports of consumer goods decreased by 6.3%.

The following table provides information about the value of Mexico’s merchandise exports and imports (excluding tourism) for the periods indicated below.

Exports and Imports


	2010			2011			2012		2013			2014⁽¹⁾			First two months of 2015⁽¹⁾
	(in millions of dollars, except average price of the Mexican crude oil mix)
Merchandise exports (f.o.b.)
Oil and oil products	$	41,693		$	56,443		$	52,956	$	49,493		$	42,979		$	4,100
Crude oil		35,919			49,381			46,852		42,723			36,248			3,283
Other		5,775			7,063			6,103		6,770			6,731			818
Non-oil products		256,780			292,990			317,814		330,534			354,556			52,151
Agricultural		8,610			10,310			10,914		11,246			12,204			2,387
Mining		2,424			4,064			4,907		4,714			5,064			822
Manufactured goods⁽²⁾		245,745			278,617			301,993		314,573			337,289			48,941

Total merchandise exports		298,473			349,433			370,770		380,027			397,535			56,251
Merchandise imports (f.o.b.)
Consumer goods		41,423			51,790			54,272		57,329			58,299			8,368
Intermediate goods⁽²⁾		229,812			264,020			277,911		284,823			302,031			44,354
Capital goods		30,247			35,032			38,568		39,057			39,647			6,219

Total merchandise imports		301,482			350,843			370,752		381,210			399,977			58,940

Trade balance	$	(3,009	)	$	(1,410	)	$	18	$	(1,184	)	$	(2,442	)	$	(2,689	)

Average price of Mexican oil mix⁽³⁾	$	72.46		$	101.13		$	101.96	$	98.46		$	86.00		$	43.67

Note: Numbers may not total due to rounding.

(1)	Preliminary figures.

(2)	Includes the maquiladora (or the in-bond industry).

(3)	In U.S. dollars per barrel.

Source: Banco de México / PEMEX.

Balance of International Payments

According to preliminary figures, during 2014, Mexico’s current account registered a deficit of 1.8% of GDP, or U.S. $24.7 billion, as compared to a deficit of U.S. $26.5 billion during 2013, which was primarily due to an increase in merchandise imports. The capital account registered a surplus of U.S. $58.1 billion during 2014, as compared to a surplus of U.S. $63.8 billion during 2013. Foreign investment in Mexico totaled U.S. $49.7 billion during 2014 and was composed of direct foreign investment inflows totaling U.S. $21.0 billion and net foreign portfolio investment inflows (including securities placed abroad) totaling U.S. $28.7 billion.

At March 20, 2015, Banco de México’s international assets totaled U.S. $197.9 billion, an increase of U.S. $2.6 billion as compared to international reserves at December 31, 2014. At March 20, 2015, Banco de México’s net international reserves totaled U.S. $195.5 billion, an increase of U.S. $2.9 billion from the amount at December 31, 2014.

The following table sets forth Mexico’s balance of payments for the periods indicated:

Balance of Payments


		2009			2010			2011			2012			2013			2014⁽¹⁾
		(in millions of dollars)
I.	Current account⁽²⁾	$	(7,724	)	$	(3,230	)	$	(11,836	)	$	(15,263	)	$	(26,284	)	$	(24,655	)
	Credits		273,250			346,529			399,248			423,510			432,753			451,004
	Merchandise exports (f.o.b.)		229,704			298,473			349,375			370,770			380,027			397,535
	Non-factor services		15,096			15,621			16,153			16,817			20,829			21,774
	Tourism		11,513			11,992			11,869			12,739			13,949			16,258
	Others		3,583			3,629			4,284			4,078			6,880			5,516
	Factor Services		6,797			10,812			10,569			13,154			9,659			7,715
	Interest		4,253			3,388			3,475			2,671			2,391			2,296
	Others		2,544			7,424			7,094			10,483			7,269			5,419
	Transfers		21,653			21,623			23,152			22,768			22,238			23,979
	Debits		280,974			349,759			411,084			438,772			459,038			475,660
	Merchandise imports (f.o.b.)		234,385			301,482			350,843			370,752			381,210			399,977
	Non-factor services		25,139			25,565			30,289			30,835			32,335			35,074
	Insurance and freight		7,510			8,723			10,225			9,726			9,755			11,604
	Tourism		7,207			7,255			7,832			8,449			9,122			9,657
	Others		10,422			9,587			12,232			12,661			13,457			13,813
	Factor services		21,389			22,626			29,774			36,976			45,364			40,500
	Interest		12,886			14,161			17,688			20,296			23,276			25,359
	Others		8,503			8,465			12,086			16,680			22,089			15,141
	Transfers		60			86			178			209			128			109
II.	Capital account		16,181			45,598			50,985			54,645			60,818			58,083
	Liabilities		34,272			91,492			61,714			88,684			103,531			82,010
	Loans and deposits		10,033			45,428			13,075			14,357			43,329			32,310
	Development banks		794			648			(283	)		398			426			870
	Commercial banks		(3,918	)		29,323			(953	)		(3,206	)		15,112			8,192
	U.S. Federal Reserve swap facility		7,229			(3,221	)		—			—			—			—
	Non-financial public sector		9,638			13,021			5,910			8,397			8,204			15,219
	Non-financial private sector		(3,711	)		5,657			8,401			8,769			19,587			8,029
	PIDIREGAS⁽³⁾		—			—			—			—			—			—
	Foreign investment		24,239			46,063			48,639			74,326			60,202			49,700
	Direct		16,605			22,563			23,553			17,810			39,172			20,955
	Portfolio		7,634			23,500			25,086			56,517			21,030			28,746
	Equity securities		4,155			373			(6,566	)		9,877			(943	)		4,833
	Debt securities		3,479			23,127			31,651			46,640			21,973			23,912
	Assets		(18,091	)		(45,893	)		(10,728	)		(34,039	)		(42,713	)		(23,927	)
III.	Errors and omissions		(3,123	)		(19,689	)		(10,712	)		(18,660	)		(16,889	)		(15,864	)
IV.	Change in net international reserves⁽⁴⁾		5,397			22,759			28,879			21,040			13,006			16,717

Note: Numbers may not total due to rounding.

(1)	Preliminary figures.

(2)	Current account figures are calculated according to a methodology developed to conform to new international standards under which merchandise exports and merchandise imports include the in-bond industry.

(3)	As of January 1, 2009, external financing of long-term infrastructure projects (PIDIREGAS) are recorded as non-financial public sector indebtedness.

(4)	The sum of items I, II and III does not equal item IV because purchases and sales of gold and silver, as well as adjustments in their value, are not reflected in items I, II and III.

Source: Banco de México.

On November 7, 2014, Banco de México’s Foreign Exchange Commission submitted a request to the International Monetary Fund (the IMF) for an advanced renewal and amendment of Mexico’s contingent credit line with the IMF. This request would extend the term of the credit line another two years. On November 26, 2014, the IMF granted this request. Following this renewal and amendment, the amount available under Mexico’s credit line with the IMF is approximately U.S. $70.0 billion. As of the date of this report, no amounts have been disbursed under this credit line.

Direct Foreign Investment in Mexico

According to preliminary figures, during 2014, net foreign investment in Mexico, as recorded in the balance of payments, totaled U.S. $49.7 billion, as compared to U.S. $63.1 billion during 2013, and was composed of direct foreign investment of U.S. $21.0 billion and net foreign portfolio investment inflows of U.S. $28.7 billion, as compared to U.S. $42.1 billion and U.S. $21.0 billion during 2013, respectively.

Exchange Controls and Foreign Exchange Rates

The peso/U.S. dollar exchange rate announced by Banco de México on April 1, 2015 (which took effect on the second business day thereafter) was Ps. 15.1206 = U.S. $1.00.

Public Finance

Revenues and Expenditures

In nominal pesos and according to preliminary figures, the public sector balance including physical investment expenditures by PEMEX registered a deficit of Ps. 150.7 billion during the first two months of 2015. This deficit was Ps. 45.7 billion during the same period of 2014. Excluding physical investment expenditures by PEMEX, the public sector balance registered a deficit of Ps. 68.5 billion during the first two months of 2015, as compared to a Ps. 18.2 billion surplus registered for the same period of 2014. In nominal pesos and according to preliminary figures, including physical investment expenditures by PEMEX, the total primary balance registered a deficit of Ps. 113.3 billion during the first two months of 2015, 394.2% higher in real terms than for the first two months of 2014. Excluding physical investment expenditures by PEMEX, the total primary balance registered a deficit of Ps. 31.1 billion during the first two months of 2015, as compared to a surplus of Ps. 41.7 billion during the same period of 2014. The public sector balance deficit increase was primarily due to stabilization fund contributions and a lower level of pre-hedge oil revenues in January 2015, both of which are expected to be compensated for later this year.

According to preliminary figures, during the first two months of 2015, public sector budgetary revenues amounted to Ps. 654.5 billion in nominal pesos, 1.9% less in real terms as compared to the same period of 2014. In particular, during the first two months of 2015, revenues have increased or decreased as follows, each in real terms and as compared to the same period of 2014:

•

crude oil revenues decreased by 46.3%;

•

tax revenues increased by 20.3%; and

•

non-tax revenues (as a percentage of total public sector budgetary revenues) decreased by 8.4 percentage points, to 15.8%, as compared to approximately 24.2% in the same period of 2014.

According to preliminary figures, during the first two months of 2015, net public sector budgetary expenditures increased by 11.7% in real terms as compared to the first two months of 2014. Net public sector budgetary programmable expenditures (excluding physical investment by PEMEX) increased by 10.4% in real terms as compared to the same period of 2014. During the first two months of 2015, the financial cost of public sector debt increased by 36.6% in real terms as compared to the same period of 2014.

As of February 28, 2015:

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the Fondo de Estabilización de los Ingresos Petroleros (Oil Revenues Stabilization Fund) totaled Ps. 16.6 billion;

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the Fondo de Estabilización de los Ingresos de las Entidades Federativas (Federal Entities Revenue Stabilization Fund) totaled Ps. 4.8 billion; and

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the Fondo de Estabilización para la Inversión en Infraestructura de Petróleos Mexicanos (PEMEX Infrastructure Investment Stabilization Fund) and the Fondo de Apoyo para la Reestructura de Pensiones (Fund to Support Pension Restructuring) did not have any remaining funds.

Public Debt

Recent Securities Offerings

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On March 6, 2015, Mexico issued €1.25 billion of its 1.625% Global Notes due 2024 and €1.25 billion of its 3.000% Global Notes due 2045. The notes were issued under Mexico’s U.S. $110 billion Global Medium-Term Notes Program.