The Wall Street Journal reported in April of 2012 that the International Monetary Fund (IMF) has given Mexico’s investment potential and the country’s financial system a favorable evaluation. This is also great news for Mexico real estate, which is continuing to increase in popularity as savvy investors worldwide look for alternatives to the failing traditional global markets.
“Mexico’s banking system is well capitalized and positioned to deal with severe shocks after proving resilient during the 2008-2009 global financial crisis,” stated analysts from the IMF, after completing an assessment of the country’s financial sector in 2011.
The World Bank also participated in the analysis, which was very positive despite Mexico’s strong link to the global economy, which has not had a negative effect on Mexico real estate, especially in the country’s most popular tourist destinations, where prices have steadily continued to rise. This is due in large part to Mexico’s demonstrated ability to react promptly and decisively in the event of another severe shock, like the one that occurred in 2008.
“Following economic recovery in 2010, stress tests conducted by the IMF suggest the Mexican banking system is able to withstand severe shocks,” stated the IMF.
Key recommendations from the IMF to Mexico involved improving regulation in a progressively complicated financial system, which will help to provide increased budget autonomy for the country’s Banking and Securities Commission, and is also expected to provide additional support for the growth of Mexico real estate. The IMF believes that this will help increase the breadth of its regulatory control and further stabilize Mexico’s banks. However, the IMF also acknowledged that Mexico has made substantial progress already on these fronts since 2006, which has undoubtedly had a positive effect on Mexico real estate since that time.
The Wall Street Journal also reported recently that Mexico’s own Financial Stability Committee conducted an assessment of the country’s financial system, finding it to be increasingly solid, which is expected to bolster the appeal of Mexico real estate for interested buyers worldwide. The analysis found the outlook to be very favorable for Mexico, despite external risks associated with the current economic uncertainty in Europe. Also, the committee found no evidence of new risks since those that were identified in 2011.
“Since the 2008-2009 crisis, Mexico has increased its foreign reserves to a record $148 billion,” stated the Wall Street Journal. “And has an unused $72 billion flexible credit line with the IMF as protection against severe bouts of financial market turmoil.”