Macroeconomic environment

In 2011, the Mexican economy continued the recovery process that began in mid-2009, with growth in the year standing slightly under 4%, essentially fueled by domestic factors: solid performance in private demand, stability in the rate of job creation in the formal sector, as well as the incipient improvement in real wages growth, which has decisively supported private consumption.

This sustained improvement has not generated inflationary pressures since core inflation remained stable thanks to the absence of pressures on demand, the slower increase of processed food prices and the exchange rate performance. The volatility of the global backdrop since August triggered the depreciation of the local currency and the decrease of various commodity prices. Nevertheless, these factors ultimately had a limited impact on inflation. The Bank of Mexico has thus been able to continue with the monetary pause it implemented in mid-2009, with a lending rate that remains at 4.5%. With respect to currency movements over the year, the Mexican peso lost 8.3% against the euro year-on-year. Thus the impact of the currency on the balance sheet and business volume in the area is negative. The average exchange rates also declined, though, in this case to a lesser extent (down 3.2% year-on-year). Thus, the effect of the currency on the income statement was slightly negative. Unless otherwise stated, all comments below refer to changes at constant exchange rate.

Mexico has developed clear strengths throughout recent years in terms of the definition and implementation of its monetary and fiscal policies and prudent regulation measures, which are especially relevant for the soundness of the Mexican banking system, for example.