9/24/2008

Slower economic growth for Mexico

A weaker American economy weighs on growth in Mexico

Few Latin American countries are as dependent on US demand as Mexico, which sells 80% of its exports to that market and some of whose industries are closely linked to those north of the border. As a result, the weaker US economy is also dragging down Mexico’s growth rate, although the extent to which it is impacted is less now than during past US recessions.

Mexico’s finance secretariat this month cut its estimate for GDP growth this year to 2.4%, down from 2.8% (which itself was a reduction from an earlier forecast of 3.7%). It cited reduced import demand in the US as the key factor. Under its 2009 budget proposal, the secretariat projects growth in 2009 of 3% (cut from 4%). Officials optimistically expect global conditions to improve next year, although they foresee a decline in output from Mexico’s critical oil sector. (They project a drop in production of 3.8%, and a fall in exports of 8.6%.) ...



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[Source: The Economist: News analysis

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