About SourceMex

SourceMex focuses on Mexican economic and political issues such as trade and investment, agriculture, elections, the petroleum industry, environment and sustainability, human rights, and social issues. It also places particular emphasis on developments and analysis of U.S.-Mexico relations, including matters related to the U.S.-Mexico border.

Current Issue

Peso Decline Raises Concerns in Mexico about Inflation, Capital Flight

The continuing slide of the Mexican peso has raised many concerns in Mexico, including the potential increase in prices for consumer goods in the not-so-distant future and the possibility that foreign investors will continue to withdraw much-needed foreign capital from the Mexican economy. Furthermore, some officials worry that the slide in the peso and a recent flight of capital from the country reflect a lack of confidence in the Mexican economy on the part of foreign investors. The peso has fallen steadily since 2013, when the exchange rate stood at 12 pesos per US$1.00. By September 2016, the Mexican currency had slipped to 19 pesos per US$1.00. External factors appear to be driving the slide, including an expectation that the US Federal Reserve (Fed) could raise US interest rates at any time. A hike in interest rates would have a direct impact on emerging-market currencies like the peso by making investments in US dollars more attractive than investments in other currencies. The Fed has kept interest rates unchanged for each of its last six quarterly meetings, but the mere threat of an increase has kept the peso on edge.

Environmental Concerns Accompany Surge in Demand for Mexican Avocados

The North American Free Trade Agreement (NAFTA) gradually eliminated restrictions on imports of Mexican avocados into the US, resulting in a surge of consumption: US households consumed a record of nearly 1.9 billion pounds (about 4.25 billion avocados) in 2015, more than double the rate of 2005 and almost four times as high as 2000, according to statistics from the US-based Hass Avocado Board. The UN Food and Agriculture Organization (FAO) presented supporting data indicating per capita consumption of avocados in the US has tripled to more than 3 kg per year over the last 15 years. The combination of relatively low prices and increased publicity about the health benefits of the fruit as a “superfood” have boosted demand. However, the increase in production, while providing great financial benefits for producers in Michoacán, is having significant environmental consequences, particularly in a region known as the Meseta Purépecha, which accounts for about 75% of the avocado output in the state. The avocado orchards in the Meseta Purépecha share terrain with pine, fir, and other evergreen trees, which producers are gradually cutting to expand their groves. A study conducted by an environmental research center (Centro de Investigaciones en Geografía Ambiental, CIGA) at Universidad Nacional Autónoma de México (UNAM) found that more than 20,000 ha of forests were lost between 1976 and 2005 in several municipalities in the Meseta Purépecha.

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