Futbol Mania is expanding into Mexico manufacturing in order to make the most of our resources and produce our products in the most efficient and effective manner possible. We are providing the following information in order to educate our managers, customers, and stakeholders as to the economic environment of Mexico.

Economic System
Mexico has a free market economy with a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity, natural gas distribution, and airports. Income distribution remains highly unequal (The World Factbook Mexico, 2003).

Economic Development
Mexico's membership of the North American Free Trade Agreement (Nafta) since1994 has encouraged massive inflows of foreign direct investment, which in turn have transformed Mexico into a manufacturing base serving its large domestic market as well the US market ("Mexico: Country Profile," 2003).

GDP and GDP Per Capita
Mexico's GDP based on purchasing power parity was estimated at $924.4 billion in 2002, while the real growth rate was estimated at 0.7% . The GDP per capita purchasing power parity for the same time period was estimated at $8,900 (The World Factbook Mexico, 2003).

Country Classification
Mexico is a developed country, with an industrial production growth rate at 4.9%(The World Factbook Mexico, 2003).

Environmental Degradation
There is a scarcity of hazardous waste disposal facilities. The natural fresh water resources are scarce and polluted in the north, and they are inaccessible and of poor quality in the center and extreme southeast of Mexico. The raw sewage and industrial effluents are polluting rivers in urban areas. There is deforestation, widespread erosion, desertification, and deteriorating agricultural lands. There is serious air and water pollution in the national capital and urban centers along the US-Mexico border (The World Factbook Mexico, 2003).

Financial Markets
The banking system was privatized in 1990, after being nationalized in 1982. Banco de Mexico issues currency, controls monetary policy and is responsible for exchange rates and national reserves. Participation of the private sector is encouraged in a capital market involving leasing, mutual funds, insurance and brokerage. The banking crisis of 1995 caused by the turmoil of peso devaluation, resulted in the closure of several banks. The government was forced to inject huge amounts of emergency capital into the system. By 2003, Mexico had 44 banks, 13 of which were government- owned ("Mexico: Country Profile," 2003).

Performance of the Nation's Stock Market(s)
Thanks to a thriving local debt market, Mexico's government and private companies are borrowing less from outsiders and more from local pension funds and other domestic investors who lend to them in pesos. In the past few years, inflation and interest rates have fallen to international levels, allowing investors to better gauge the future value of money. The country, under President Vicente Fox, has seen progress in areas such as the local lending market, which highlights the benefits of stability (Luhnow, 2003). The level of external debt is currently at $150 billion (The World Factbook Mexico, 2003).

Exchange Rates
Exchange rates of Mexican pesos per US dollar have changed only slightly over the last few years - from 9.66 in 2002, 9.34 in 2001, 9.46 in 2000, 9.56 in 1999, and 9.14 in 1998 (The World Factbook Mexico, 2003). Currently the exchange rate is at the highest with about 10.59 Mexican pesos per US dollar (San Miguel Guide: Currency and Exchange Rates, 2004).

Inflation
The inflation rate (consumer prices) for 2002 was estimated at 6.4% (The World Factbook Mexico, 2003).

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