Question

Please, I need the following indicators for Mexico 2020 and Peru 2020, if you can provide numbers from a trustworthy website.

·        Flexibility of Exchange rate: fixed or flexible?

·        Size of Current Account Deficit: large or small?

·        Size of Budget Deficit: large or small?

·        Amount of Foreign Reserves: small or large?

·        Amount of Foreign Debt: large or small?

Political Risk: high or low?

Answer 1

1. EXCHANGE RATE

* Mexico - Flexible exchange rate system

1 Mexican peso= 0.040 US dollar ( 4 th May 2020)

* Peru -Managed floating ( variant of flexibility exchange rate system)

I sol ( currency in Peru )

= 0.30 US dollar ( 4th May 2020)

Note : Value of peso is less than the value of sol

2 current account deficit

*Mexico - As per the data published in February 2020. Mexico recorded it's smallest current account deficit in 24 years during 2019.lt was 0.2 percent of GDP . There was a current account surplus of $ 2.486 billion during October-December period.lt is supposed to worsen again with the outbreak of corona pandemic.

* Peru - Has also been experiencing a decline in current account deficit.

In Dec 2019 the deficit was only 1.5 percent of the GDP (26.1 million us dollar)

In 2020 it was predicted to reach -2 percent.But corona pandemic may cause disruptions.

Note : in terms of GDP Mexico's current account deficit is lower than Peru.

3 Budget deficit

* Mexico- 1.6 percent of GDP( at the end of 2019)

*Peru -1.4 percent of GDP ( at the end of December 2019)

Note : Both of the countries have smaller deficits compared to other latin American nations.In terms of GDP Mexico's budget deficit is greater than Peru.

4 Foreign reserves

Mexico-188405 million us dollar ( March 2020)

Peru -68471 million US dollar( Jan 2020)

Note : Both have high foreign exchange reserves.But Mexico has higher reserves than Peru.

5 Foreign debt

Mexico-463.7 billion us dollar ( Dec 2019

Peru -79956 million us dollar ( Jan 2020)

Note : Foreign debt of Mexico is very higher than Peru

7.political stability

Peru - Peru is undergoing through a political crisis.From 2017 onwards ,there has been instabilities and it worsened in 2019.

Mexico- political turbulence has always been a threat to Mexican Economy

Note: Peru had a better political environment than Mexico till 2017. But at present both of the nations are dealing with instabilities.