With the goal of sharing the views of experts on the possible development of the national and regional economy, and in order to define the expectations of development and productivity, this past January, Baja California's State Economists College (CCEBC) held the "Economic Outlooks 2015" forum, in Tijuana. In it, various eminencies participated, such as: Dr. Cuauhtémoc Calderon Villarreal, Northwest Region Vice President of the Federation of Economists Colleges of Mexico and President of CCEBC; Martin Ramirez Urquidy, director of UABC's Faculty of Economics; Roberto Fuentes Contreras, deputy director of SEDECO's Economic and Statistic Analysis; and Luis Felipe Ledezma Gil, alderman president of the Committee on Environment and Sustainable Development of Tijuana's XXI City Council.

Dr. Calderon Villareal did a review of the current view of the world economy and its impact on the Mexican economy. He explained that the economy moves in cyclical fluctuations, that is, long periods of 30 years. Now, the world economy has entered a turning point, where the expansion phases become shorter and the recovery phases become longer.

"After the 2007-2009 great recession, we are living a new phase in which positive signs of recovery in the US economy are being observed; nonetheless, in a paradoxical turn of events, this recovery occurs in a highly recessionary environment in Europe."

He explained that the growth outlook for the U.S. would be 3.1%. The recovery effects in the US economy will be reflected in an improvement in labor market, its oil exports and a fall in its trade deficit. Meanwhile, China's economy, which had been the growth engine of the world economy, will start to decelerate. Brazil will grow by 1.4%, Japan -a paralyzed economy since the 80s - shall not exceed its process of stagnation, and the euro area, the hardest hit in the last recession, will continue within that range.

The economist said that according to the World Bank, the trend towards falling oil prices continues. "What may be good news for the US, are, actually, bad news for Mexico, because falling oil prices mean that a budget cut or that an implementation of measures by the federal government to offset the fall in budget revenues, are a certain thing. The Ministry of Finance and Public Credit seek to increase their income by all means, probably through higher taxes. This would put us in front of a restrictive fiscal policy that would tend to impact on aggregate demand and cause a further contraction of the Mexican economy", he said.

Following the unfavorable expectations, Dr. Calderon Villareal said that, due to domestic factors, by the end of 2015, a recession in Mexico is expected. "Inflation could increase to over 4%, there will be a tendency towards increasing prices of products derived from the increase in gas prices; furthermore, newly created jobs will be characterized by a temporary and precarious nature", he pointed out.

He said that foreign direct investment is an important element, but not the most important one to solve the problem of unemployment in Mexico and Baja California. "A strategic industrial policy is needed in the country; this hasn't materialized since the period of Salinas. This policy needs to be coupled with another one that encourages small businesses in the tertiary sector. In this regard, he said that, in San Diego, CA.

78% of employment is being generated by SMEs. "The key to job creation is found within SMEs", he said.

Towards the end of his participation, Dr. Calderon Villareal said... Continue reading article here

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