Summit Notebook

Exclusive outtakes from industry leaders

A bad case of pneumonia for the Mexican economy

May 8, 2009

                                       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.

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