manuel sanchez : mexico ’ s economic integration and outlook remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the united states - mexico chamber of commerce, california regional chapter, los angeles, 9 december 2011. * * * it is an honor to be in los angeles to address the united states - mexico chamber of commerce. i would like to thank the organizers of the 14th annual mexico economic review and political outlook 2011 for the invitation to speak to you today. because california is one of the u. s. states most interconnected to mexico, it is natural to begin my review of the mexican economy by examining its ever - increasing integration with that of the united states. after that, i would like to describe the effects of current international conditions on mexico and discuss its economic outlook. my main message is that, while the strength of the current economic upturn in mexico may be limited by that of the united states, the benefits of its long - term association with its northern neighbor continue to be substantial. also, mexico will realize its upside potential for sustained economic growth if it strengthens its fundamentals and promotes pending structural reforms. as usual, my remarks are entirely my own responsibility and do not necessarily reflect those of the bank of mexico. expanding economic integration during the last three decades, mexico has been undergoing a process of expanding economic integration with the united states. deeper relations between the two countries have been built on their geographic proximity, especially as a result of the opening up of the mexican economy, which began in 1983 with a phase of unilateral reduction of tariffs and other barriers to trade. ever greater openness has been achieved through the north american free trade agreement ( nafta ) since 1994, which included canada, the united states and mexico. despite the important role that canada plays in intraregional transactions, in what follows i will focus on the growing economic links between the united states and mexico. enhanced economic integration between these two countries is multifold. the most dramatic reflection of this relation is the consistently high growth of their bilateral trade in goods and services, which surpasses that of their respective gdps. specifically, highly dynamic mexican exports to the united states have implied markedly more mexican imports from north of the border. additionally, bidirectional tourism has been increasing, and workers ’ remittances from the united states are an important source of inflows in mexico ’ s balance of payments. at the same time, foreign direct investment between the two countries

to essential medical supplies, but in the form of monetary policy support that central banks in developing countries could provide in supporting the recovery of their respective economies. rather than let the crisis compound our problems, we reflected on ways in which we could turn the crisis into an opportunity. one that would reset the trajectory of our economy from its dependence on imported items to one that is more resilient and productive. 22. with the pace at which viruses spread, which could significantly derail economic growth, we were further emboldened to work on measures that would improve productivity, support employment generation and strengthen the resilience of our economy to external shocks. 23. as a result, working with the fiscal authorities, we took unprecedented measures to contain the effects of the pandemic on our economy, in addition to other efforts aimed at stimulating greater economic activity in key sectors of our economy. please permit me to highlight some of the steps we took towards achieving our mandated goals. containing the impact of covid - 19 24. first, the central bank of nigeria worked with the fiscal authorities in instituting strong policy support measures capped under the economic sustainability plan ( esp ), which was designed to contain the effects of the pandemic, restore stability to the economy by helping households and businesses affected by the pandemic and to lift our economy out of the woods through massive interventions to critical sectors. 25. under this plan, the monetary and fiscal authorities collectively mobilized and injected over n5trillion to support households and businesses. it is gratifying to state that the central bank of nigeria deployed more than n3. 5trillion, - about 4. 1 percent of nigeria ’ s gdp to critical sectors such as agriculture, manufacturing, electricity, and healthcare in order to stimulate and help the economy recover from the deep shock. other specific policy measures undertaken include. a ) reduction of the monetary policy rate from 13. 5 to 11. 5 percent to improve the flow of credit to households and businesses. b ) reduction of the interest rate on cbn intervention loans from 9 to 5 percent. c ) extension of the moratorium on principal repayments for cbn intervention facility to march 2022. d ) granted regulatory forbearance that allow banks restructure loans given to sectors severely affected by the pandemic. e ) strengthened the loan to deposit ratio policy, which has resulted in a significant rise in loans provided by financial institutions. total gross credit rose by over 21. 1 percent over