La Paz, BCS - Welcome to our Third Quarter, 2015 Newsletter. In this edition, we have economic news from Mexico, a report on an International Education event, an AMPI Symposium, a market report from Puerto Vallarta and an article on Noche de Muertos in Michoacán.

Noche de Muertos in Michoacan

Dia de los Muertos, Day of the Dead, celebrated in Mexico and other Hispanic countries, has considerable religious significance and predates the conquest of Mexico by Hernando Cortez. The festive period begins on the night of October 31 and continues through All Saints Day and All Souls Day, celebrated November 1st and 2nd respectively.

On the night of October 31st, in rituals that recall the ancestor worship of their Indian forefathers, many Mexican families erect altars to the dead in their homes, as well as in the cemeteries where their loved ones are buried. Included in these altars are ofrendas, offerings of the favorite foods and drinks of the departed, to be enjoyed by their spirits when they return to visit their loved ones.

The altar is laden with bright orange marigolds (the zempoalxochitl, flower of the dead) and mota, a deep purple velvety flower, and is lighted with a multitude of candles. Traditionally, the altar is lighted on the evening of the 31st to await the arrival of the dead children, Los Angelitos. At twilight on November 1st until dawn of the 2nd, the altar is again lighted and this time the vigil is for the departed adults.

Most people who live in Mexico are aware of the traditional Noche de Muertos activities and traditions. What is less known is the Festival de Velas (candle festival) that takes place in Uruapan, Michoacán. In 2015 the Eighth Annual Festival will be presented.

More than 10,000 candles will be lit each evening. This includes a line right down the middle of Calle Corregidora, a pedestrian walk way.

During the period of October 29 through November 2nd special cultural events will be staged... The inauguration will include the unveiling of a large Ofrenda (altar) in the main plaza. Altars will also be erected at both ends of side streets. As well they will line the street that runs from Corregidora, five blocks to the Parque Nacional. Young people will explain the content of each Ofrenda.

Each evening one of Uruapan's nine barrios (neighborhoods) will make a presentation of music and dance. They will be attired in traditional costumes... There will be a photo exposition at the Museo in the Huatepera. (Originally the oldest hospital for Indigenous people in the new world and now a museum exhibiting the cultures of 4 different groups.)

There will be a play in the public library, Justo Sierra, and a presentation of music and dance in the Casa de la Cultura by a group of Purepecha peoples. Truly a festive environment will be created. On the streets one can see Catrinas that have been constructed by students as well as "living" Catrinas. Some will don costumes and have faces hand painted to portray skeletons. At 7 pm on the 2nd of November, the Festival will come to a close. At that time 1,000 lit balloons will be sent skyward.

With Declining Oil Prices, Mexico's Economy Is Down but Not Out
World Politics Review

Earlier this month, the Mexican government submitted a budget to cut spending in 2016, including reduced investment in the state oil company Pemex, given the drop in global oil prices. In an email interview, Ambassador Antonio Garza, former U.S. Ambassador to Mexico, and currently counsel in the Mexico City office of White & Case LLP, discussed Mexico's economy and the impact of the oil shock.

WPR: How have declining oil revenues affected Mexico's budget and spending power?

Antonio Garza: Historically, Mexico has relied on oil revenues to fund roughly one-third of its budget. This arrangement was fairly stable when oil prices were high, but as prices began plummeting last summer, so did the amount of money coming into government coffers, amounting to a roughly 36 percent year-on-year decrease for the first six months of 2015. The drop was steep, but things weren't as bad as they could have been. Certain policies and outcomes - such as the government's widespread hedging program, an uptick in non-oil taxes from the 2013 fiscal reform and a revenue surplus from the gasoline price cap - certainly helped lessen the budgetary pressure.

Going forward, the Mexican government will need to find ways to fill the remaining revenue hole. So far, it has chosen to avoid seriously taking on more debt or raising taxes, and, instead, the government has focused on cutting spending. When Finance Minister Luis Videgaray presented the proposed 2016 budget in early September, it contained 1.15 percent of GDP - or $13 billion - in spending cuts. Videgaray also promised to slash another $5.8 billion in the coming weeks.

WPR: How have Mexico's energy reforms been impacted by lower oil revenues?

Garza: In 2013, Mexico passed historic reforms that opened the energy sector to private companies for the first time in over 70 years. Yet soon after the legislation package made it through both houses of Congress, the price collapse altered the entire energy landscape. International companies, once eager to invest heavily in Mexico, became more cautious as their own revenue pools shrunk. To entice them, Mexico's oil and gas fields now need to be unambiguously attractive.

Mexican officials gradually adjusted their approach as the prices sunk. Their first step was postponing bidding on unconventional resources, given that they were now largely unprofitable. Then, after a disappointing first bidding round in July 2015 - only two of 14 fields were placed - officials realized that they needed to become even more competitive. In response, they took the welcome steps of listening more to investors, changing controversial parts of contracts and releasing minimum bid requirements ahead of time.

WPR: What are the broader economic and political implications of lower oil revenues for Mexico?

Garza: Politically, Mexico's resource crunch, along with sluggish global economic growth, reorients the government's short-term strategy and priorities. Instead of spending the higher tax and energy windfalls on special projects, the administration's time and energy will now need to include balancing the budget and cultivating alternative revenue sources. The oil shock is also especially difficult for state-owned oil company Pemex, which, when combined with slides in oil production, saw its net revenue fall by 28 percent in the first half of 2015. This drop has decimated the company's investment budget, compromising its attractiveness as a dynamic partner for private investors.

Yet the oil collapse also offers a space to streamline and improve government finances. There is now an opportunity to reorient a greater share of the budget toward more stable non-oil tax revenue. Similarly, the budget cuts, if undertaken thoughtfully, could also create space for the government to improve its efficiency-doing the same work with less. Of course, neither of these measures is voluntary, but they could help Mexico avoid having volatile resource prices inflict any future pain.

NAFTA News: US-Mexico High Level Economic Dialogue in Ongoing Collaboration

On July 29th, high-level Mexican and U.S. government officials reviewed the progress made under the U.S.-Mexico High Level Economic Dialogue (HLED) and determined next steps in the efforts to make North America the most competitive economic region in the world. Read more HERE.

Mexico is Enhancing the Growth of the Services Economy

Services are a key driver of Mexico's economic performance and growth. The services industry represents over 62 percent of the country's domestic product and more than 58 percent of total employment, employing over 18 million workers.

Global Mexico Real Estate Institute Arrives in Vallarta

Global Mexico, an organization that was created last year to bring professional education to real estate agents in Mexico, is offering Banderas Bay area realtors a Certified International Negotiation Expert class at the Holiday Inn Express in Puerto Vallarta, October 19-20. Read more HERE.

IV Symposium of Historic Centers and World Heritage Cities

San Miguel de Allende, declared a World Heritage Site by the United Nations, was the ideal location for The Mexican Association of Real estate Professionals (AMPI) to stage its Fourth Annual Symposium of Historic Centers and World Heritage Cities. Read more HERE.

Vallarta Real Estate Market Report: First Half of 2015

As in many real estate markets throughout North America, the market in Mexico's beachfront tourist destinations has been showing incredible signs of growth. In Puerto Vallarta, there has been a 25% increase in total sales during the first half of 2015. Read more HERE.