| | |  Business News | May 2009 
A Bad Case of Pneumonia for the Mexican Economy
 Cyntia Barrera - Reuters
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| | Finance Minister Agustin Carstens | |
At the beginning of 2009, as Mexico felt the pinch of the U.S. meltdown, Finance Minister Agustin Carstens said the country’s economy was much better prepared than before to resist slowing business from its northern neighbor, where it ships about 80 percent of exports.
Asked about the possible effects of the U.S. recession in Mexico, he candidly anticipated in a TV interview in February the economy would only “catch a little cold instead of a pneumonia.”
The phrase has haunted him ever since as mounting bad news — unemployment, inflation, industrial activity — show Mexico is not immune to the U.S. crisis.
With Mexico officially in recession — GDP contracted 1.6 percent in the first quarter versus the same period of 2008 and could fall further in the current quarter — Carstens now thinks the economy may not grow again until the first quarter of 2010.
In an affable chat with Reuters during the Latin American Investment Summit, Carstens also talked about measures taken to keep the peso from weakening further against the dollar but shied away from saying if, or when, daily dollar sales could stop.
Rollercoaster Ride May be Over, Ortiz Says
Cyntia Barrera - Reuters
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| | Central Bank Gov. Guillermo Ortiz | |
But we still have the bumper cars...
Mexico’s central bank Gov. Guillermo Ortiz thinks the world economic crisis is probably past the worst but warned growth in the third quarter could contract on an annual basis.
Speaking at the Reuters Latin American Investment Summit, Ortiz — who also fronts the Bank for International Settlements — said there is a growing sensation that the crisis may have bottomed. Inflation in Mexico is likely to decline, helped by lower demand and the peso stopping its free fall against the dollar.
Two types of market interventions since October, where the government sold dollars to ease pressure on the exchange rate, have managed to pull back the peso to levels of just above 13 per greenback, a gain of about 19 percent from its March all-time low.
Ortiz also said the central bank is touching base with key market players to evaluate if a second auction of short-term dollar credits, aimed at triggering lending to companies once again, is needed. |
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