2010: A year in recovery

A year full of hope, a year full or opportunities, a year of growth and clearer signs of economic and financial recovery, not to mention a year of learning from the past mistakes – that is how the year 2010 is described by many sectors of society. 


The year that was 

Last year, Mexico suffered its worst recession in almost a century. This resulted not only from the heavy reliance upon the United States as a trading partner but also from a weak anti-crisis defense system and the outbreak of the A/H1N1 virus which somewhat disrupted the "normal" business activities of the country.



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Steps to a total recovery 

Mexico implemented recovery plans that entailed protection of employment, financial aid to families, freezing in the price of petroleum gas and increase in infrastructure spending. 

After reporting an economic fall of 7.0% in 2009 yet registering a growth in trade and a drop in the unemployment rate, Mexico is now in the process of absolute recovery. According to a representative of Banco Interamericano de Desarrollo (BID), for the year 2010, Mexican economy is predicted to grow between 3.0 to 3.5%, aided by the recovery of the US market, where almost 80% of Mexico‘s products are being exported. The predicted growth is also supported by a favourable performance of the price of Mexican export petroleum oil, the Mexican stock exchange and the improvement of the manufacturing sector and external trade. 

February of this year, President Felipe Calderón called on to the financial sector to double its efforts to facilitate the availability of manufacturing resources to the productive sector. The Mexican government is also consistent in supporting small and medium scale enterprises. The Executive Chief emphasized the need for a major effort coming from all areas of the Mexican economy, including from the banking sector, in order to have a sustainable economic recovery. 

Meanwhile, Mexico‘s secretary of Work and Social forecast, Javier Lozano Alarcón, highlighted that an increase in the creation of around 350 to 400 thousand jobs is expected if Mexico‘s economy achieved the predicted 3.0% growth. He added that this forecast allows the Mexican government to see the signs that there is really a nearing economic recovery.


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Some analysts worry that the uncertainty in the US economy, which seem to be the engine of Mexican recovery, would gravely affect the strong momentum its economy is now experiencing. Problems of unemployment and high indebtedness are still plaguing the US economy and are feared to hinder Mexico‘s dynamic recovery. Another factor to take caution is inflation. The prices in Mexico during the first half of January rose to 0.75%, as reported by Banco de Mexico (central bank). This increase in rate is higher than expected and is the biggest rise in the first two weeks of January of a year in at least the last nine years. This could result to a reduction in consumption and investment, two of the main engines of economic growth. 


Confidence is the Key

In his New Year address for 2010, President Calderón expressed his confidence in Mexico‘s future. He emphasized that the public finances of Mexico is in order and that investors‘ expectations of the country is improving. He assured the Mexican people that the

government is working hard so that the recovery will lead to more jobs, thus will ensure a greater well-being for the Mexican people.

Furthermore, President Calderón encouraged his countrymen to work and unite, as 2010 is not only the year for recovery, it is also the bicentennial year of Mexico‘s independence and the centennial year of the Mexican Revolution. Likewise, Secretary Alarcón emphasized that trust in the Mexican government and confidence in what they can do to move the country forward is needed and is a part of the recovery. As a proof that there is confidence in Mexico‘s economic recovery, International Monetary Fund (IMF) renewed the US$48 billionflexible credit line for Mexico. IMF‘s executive board acting chairman, John Lipsky lauded Mexico‘s ―sustained record of sound economic policies‖ and ―very strong economic fundamentals and frameworks.‘‘ The said credit line granted by IMF may not be of immediate use to Mexico but it cannot be denied that this gives confidence to investors and businessmen alike.


Sources: El Financiero (www.elfinanciero.com.mx), There are signs of Economic Recovery
in Mexico, but... (www.mexidata.info), Pres. Calderón’s 2010 New Year Address
(www.mexicopremiere.com), www.informador.com.mx, www.eleconomista.com.mx.,
www.etaiwannews.com
Images : www.businessweek.com