making markets operate more freely, reducing obstacles to private investment and increasing competition. 6 among other changes, with the new labor legislation, temporary hiring is allowed, and wages can be determined by productivity rather than seniority. also, mandatory back wages after labor disputes have been capped, and the “ closed shop clause ” for unions was repealed, meaning that if a worker leaves a union, the employer does not have to terminate the labor relationship anymore. the education reform enforces hiring and promotion based on qualifications and performance for teachers in public education at all levels before college. an autonomous evaluation institute is in charge of the process, open not only to candidates from teachers ’ schools. in telecommunications all operators are allowed to provide triple play services subject to restrictions for dominant firms, and limits on foreign direct investment ( fdi ) are reduced. new licenses for tv frequencies will be auctioned to form at least two new national - coverage tv companies. a new regulatory authority is now in place. the financial reform pursues stronger protection for creditors ’ property rights, by closing legal loopholes used by debtors to prolong the debt resolution process, and reducing obstacles to expediency in the judicial process to recover collateral. more competition is encouraged through the facilitation of loan substitution by debtors across banks and the prohibition of bundled sales of financial products. regulation and supervision are strengthened, and a new banking resolution mechanism has been established. of particular interest is the energy reform. before the reform, production and most other activities in this sector were open only to government monopolies. the reform has modified the mexican constitution to allow wide access to the energy sector to private participants. major changes include contracts in exploration and extraction for oil and hydrocarbons ; permits in gas processing and oil refining, transportation, storage, distribution, and commercialization ; and participation in electricity generation and sales. the depth of the benefits the reforms could eventually bring depends greatly on how they are implemented. additionally, to more profoundly transform mexico ’ s economy, other policy measures would help, such as strengthening the rule of law, enhancing physical infrastructure, and improving public security. meanwhile, the reforms undertaken offer great scope for further u. s. investment in mexico, thus further binding the two economies. mexico ’ s economic outlook after a year and a half of deceleration, during 2014 mexico ’ s economy has been gaining steam. higher momentum has been supported by stronger manufacturing output which, in turn, has been linked to increasing external demand, notably

from the united states. auto exports to this country, in particular, have posted a significant rise since february. following six quarters of decline and stagnation, mainly reflecting lower public spending and the bankruptcy of the three major housing developers, construction picked up in the second quarter. domestic spending also has begun showing signs of recovery. both private consumption and total investment have rebounded, although the latter remains below the for an identification of obstacles to productivity growth in mexico and the potential of reforms, see hanson, g. h. ( 2011 ), understanding mexico ’ s economic underperformance. washington, dc : migration institute policy ; arias, j., et al. ( 2010 ), “ policies to promote growth and economic efficiency in mexico. ” institute for the study of labor discussion paper 4740. bis central bankers ’ speeches levels prevailing two years ago. unfortunately, consumer and producer confidence indexes remain relatively low. notwithstanding some recent pressure partly from geopolitical risks, international financial volatility has declined so far this year, largely reflecting the market ’ s perception that the normalization of monetary policy in the united states is not imminent and will be gradual. declining international risk aversion has fueled some appreciation of mexican financial assets. the yield curve has shifted downward in tandem with that of the united states. as in many other emerging - market economies, the proportion of nonresidents ’ holdings of mexican government peso securities has remained relatively stable since 2013. this may attenuate concerns about possibly ever - increasing financial risk in the economy. however, as experience confirms, portfolio capital flows can easily stop and even revert following a change in market sentiment. due to longstanding, extraordinarily accommodative monetary policies in advanced nations, international markets have tended to react negatively to good news from those economies and vice versa. this apparently awkward behavior seems to reflect the search for yield facilitated by those policies. mexico ’ s strong fundamentals have drawn players with long - term investment profiles. yet, mexico is not immune to spillover effects from factors unrelated to fundamentals, such as anticipation of the path of u. s. interest rates, which could induce a redirection of capital flows away from emerging markets. hence, domestic financial risks should be monitored. on the back of expected higher u. s. growth, a gradual recovery of the mexican economy this year and next is predicted. the bank of mexico ’ s gdp interval forecast is for 2 - to 2.