Near-term Economic Growth Forecast for Mexico

International banking pressures may result in no near-term economic growth in Mexico according to an analysis published by Bloomberg.com on October 7, 2008. The published exchange rate at October 9, 9 o'clock PDT was:

1 USD/MXN 12.472.

``What we've seen with the Mexican peso and most Latin American currencies is that fear imposes a lot of pressure on exchange rates,'' said Alfredo Coutino, a Latin America economist at Moody's Economy.com in West Chester, Pennsylvania. ``Investors are contaminated by global fear.''

The peso dropped 4.1 percent to 12.3146 per dollar at 4:15 p.m. New York time, from 11.8050 yesterday. The currency touched 12.3669, the weakest since 1993, when the government introduced a new peso equivalent to 1,000 old pesos. It was the second straight day the currency dropped to a record.

President Felipe Calderon is preparing an economic package with the Finance Ministry to soften the impact of the global credit crisis, Central Bank Governor Guillermo Ortiz said today in an interview on Radio Formula. The currency won't continue to weaken like it has so far this week and won't depreciate like it did during the 1995 banking crisis, when it fell 51 percent over a three-month period, he said.

Mexico will still see ``high'' inflation in the next several months, while the U.S. inflation rate will slow more than expected, Ortiz said.

No Growth

The global credit crisis has already reduced some expectations for growth in Mexico, curbing demand for pesos. The slowdown in the U.S. will hold growth in Mexico to zero next year, wrote Gray Newman, chief Latin America economist at Morgan Stanley in New York, in a research note yesterday. The firm cut its 2009 economic growth forecast for Latin America to 1.5 percent from 3.5 percent, citing reduced demand for the region's commodities.