 |
|
|
 Business News | May 2006 
Mexican Economy Grows 5.5% on Strength of Autos and Oil
 Elisabeth Malkin - Newswire
Mexico City - Mexico's economy expanded 5.5 percent in the first quarter over the similar period last year, the Finance Ministry said this week, the fastest growth since 2000.
Economists pointed to the data as evidence that Mexican industry was recovering from the shock of Chinese competition.
A surge in manufacturing that began late last year and increased construction spending was behind the growth, analysts said. Mexico's auto industry has had the most notable rebound: output grew 54 percent in the first quarter as plants here began producing models like the Ford Focus.
At the same time, the federal government is flush with additional revenue from the soaring price of Mexican oil exports. By law, much of that money must go toward spending on infrastructure. With an eye to presidential elections on July 2, both the federal and state governments are hurrying to make those investments.
Alfredo Thorne, an economist with J. P. Morgan Chase in Mexico City, remarked, "The truth is that all the stars are aligned in favor of Mexico, and that's what the numbers are showing."
On a seasonally adjusted basis, the economy grew 1.54 percent over the preceding quarter, the ministry said.
After President Vicente Fox took office at the end of 2000, Mexico's economy sustained a double blow.
A recession in the United States, which buys 85 percent of Mexico's exports, stunted export growth.
At the same time, China's economic rise created a longer-term challenge as factories there competed directly with Mexico to sell the same goods more cheaply to the United States. Employment in this country fell as companies left for China.
Growth in the first five years of Mr. Fox's presidency averaged less than 2 percent annually, and the anemic economy fueled continuing emigration to the United States.
In response to the Chinese threat, many companies cut costs and invested to become more competitive. Along with the auto industry, new foreign investment has revitalized the electronics industry, Mr. Thorne said.
But few economists maintain that the economy can sustain this kind of growth for the rest of the year. In part, the first-quarter figures were buoyed by the fact that Easter week this year fell in April, which meant that there were more working days in the first quarter this year than last year.
And analysts are watching for signs that the United States economy will slow later this year.
Delia Paredes, senior economist at the Santander Financial Group in Mexico City, said she expected national growth for the year to reach about 3.5 percent. For an economy with the potential of Mexico's, she said, that is not enough.
Mexico's Presidential Spokesman: Economy Could Grow 4.5 Percent This Year
Associated Press
Mexico City – Mexico's economy could grow more than 4.5 percent this year, following a rapid expansion in the first quarter, presidential spokesman Ruben Aguilar said Thursday.
The Finance Ministry said Wednesday that gross domestic product, a measure of the output of goods and services, was 5.5 percent higher in the quarter than in the first three months of 2005.
Aguilar said it was the fastest growth for a quarter since President Vicente Fox took office in December 2000, and opens the possibility that year-end economic growth “could be above 4.5 percent.”
The first-quarter expansion was boosted by a recovery in industrial production and by the Easter holiday falling in April this year instead of March, giving the period more working days. The opposite calendar effect will occur in the second quarter.
“Although we expect the upcoming quarters to register more subdued growth than that of the first quarter, we believe the country is on track to register healthy GDP growth of nearly 4 percent in 2006,” UBS Investment Research said in a report.
BBVA Bancomer, Mexico's largest bank, said Thursday it's reviewing its GDP estimate and could raise it to around 4 percent, which is roughly what the Finance Ministry and the central bank are expecting.
“It's clear that the economy is showing more favorable conditions than those expected at the beginning of the year, particularly strong U.S. consumption, higher income from oil and remittances, as well as lower interest rates,” BBVA Bancomer said.
JP Morgan said it is keeping its 4.5 percent GDP estimate for the full year, which it noted was at the top end of the range.
This is the last year of Fox's six-year term, with elections scheduled on July 2 to pick his successor. Mexican law prohibits presidents from seeking re-election.
Aguilar enumerated several recent economic indicators, including employment, foreign reserves and interest rates, which, he said, “reveal the strength of the economy even in the framework of an electoral process.” |
| |
|
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us