POLICY AREA 1: MACROECONOMIC FRAMEWORK
Key prior actions for HUDPL III
5. The key prior action of maintaining a sound macroeconomic framework consistent with the policy objectives has been met. During 2004–06, the Mexican economy experienced above-average economic expansion (section II). The growth acceleration was supported by a favorable external environment of strong global economic growth and strong demand for Mexican manufactured goods, international liquidity and access to external finance, and high international oil prices. A subsequent deceleration in global expansion and in US economic activity has weakened Mexico’s recent growth performance. Yet, these outside forces have motivated Mexico to press ahead with more ambitious efforts to tackle structural challenges and impediments to enhanced economic growth. Mexico’s recent public pension reform should enhance the country’s fiscal sustainability and commitment to stay on a sustainable public debt path.