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 Business News | October 2007 
Mexico Is Well Prepared to Face U.S. Recession, Carstens Says
 Jeb Blount - Bloomberg
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| | Mexico's Finance Secretary Agustin Carstens Carstens |
Mexico is better prepared to face a recession in the U.S. than ever before and will likely grow faster than the International Monetary Fund expects, Mexico's Finance Secretary Agustin Carstens Carstens said.
While the U.S. faces a 30 percent chance of a recession, the result of defaults on U.S. mortgages driving up credit costs and causing the housing market to slow, Mexico's credit markets are robust, Carstens Carstens told reporters at the Mexican Embassy in Washington. The country's planned infrastructure spending will also help Mexico withstand a decline U.S. exports.
The U.S. is Mexico's biggest trading partner. Much of its industry makes products for U.S. manufacturers. Most of its oil, Mexico's biggest export, goes to the U.S. Mexican workers in the U.S. sent $23 billion home last year. Those transfers were Mexico's second-largest source of foreign income.
"There are risks, and the U.S. economy is vulnerable," he said. "But our internal market is healthy and our infrastructure spending should keep the internal economy strong."
Mexico will grow 3 percent in 2007 and 3.7 percent in 2008 faster than the IMF expects, Carstens Carstens said.
"We have been castigated by the IMF a bit on this," he said. "We will do better than that."
According to the IMF's World Economic Outlook, Mexico will grow 2.9 percent in 2007 and 3 percent in 2008.
Problems in the U.S. housing market, though, are already being felt in Mexico as the growth of remittances from Mexicans in the U.S. is slowing along with the U.S. construction industry.
Remittances rose 2 percent in August from a year earlier, the smallest increase since the government began tracking the figures in 1995.
Contact Jeb Blount in Washington at jblount@bloomberg.net |
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