Quote:
Originally Posted by mark46th
Just remember- All the killing in Mexico is the United Sates' fault. We supply the weapons and the money to buy them because of our insatiable thirst for recreational narcotics. I feel so guilty.
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Mexican economy grows fastest in 10 years
Wednesday, February 23, 2011
MEXICO CITY:
Mexico’s economy accelerated at the end of 2010 to lift annual growth to the fastest in a decade but low inflation means policymakers are likely to keep interest rates steady in coming months.
The economy grew 1.3 percent in the fourth quarter from the previous three-month period, the national statistics agency said on Monday, nearly double the rate of the previous quarter.
For the year, the economy grew 5.5 percent, the best performance since 2000 and closing in on the higher growth rates enjoyed by regional peers like Chile and Brazil.
Although the increase was not enough to make up for the deep contraction of 2009, economists welcomed signs Mexico’s recovery is becoming more broadly-based.
Annual growth in services picked up to 4.2 percent. Industry, while decelerating from the previous quarter, rose 4.7 percent. “Manufacturing was stronger but most importantly the services sector grew significantly,” said JP Morgan economist Gabriel Casillas.
Domestic demand has been the missing link in the recovery so far, which also has been held back by a drug war that is leading some companies to cancel investments.
Export sector growth now appears to be spilling over into the wider economy by trimming unemployment rates and boosting retail spending.
“Growth is now more balanced,” Finance Minister Ernesto Cordero told a news conference.
Ivan Bocarando, general manager of Autotecnica Roca, a dealership of US carmaker Chrysler in the western city of Zapopan, said business in the final three months of last year was “satisfactory” but he saw better times ahead.
“I expect the first quarter to be a bit better, because it looks like the economy is picking up somewhat,” he said.
Compared to the fourth quarter of 2009, the economy expanded 4.6 percent. Cordero said drug cartel violence was “undoubtedly stunting a lot of commercial activity” in isolated parts of the country, but that there was no evidence this was slowing the wider economy.
Indeed, growth in factory exports accelerated during the period, and the country’s overall growth prospects have improved due to US plans to keep fiscal stimulus in place this year.
Roughly 80 percent of Mexican exports go to the United States.
Nonetheless, Mexican bank Banorte reckons the country’s drug war is reducing long-term growth by 1-2 percentage points.
The bank bases its estimate on the historical economic performance of countries torn by violent conflict.
Mexico has lagged growth rates in Brazil, which likely grew as much as 8 percent last year. But so far it has avoided the inflation headache troubling many emerging markets as they outpace recoveries in the developed world. Brazil hiked interest rates several times in 2010. This has boosted Brazil’s currency to dizzying heights to the consternation of exporters.
In Mexico, however, inflation is decelerating as 2010 tax hikes fall off the annual reading, and the central bank will likely keep its benchmark rate on hold at 4.5 percent until the first quarter of next year, said Santander economist Rafael Camarena. Food inflation, which is gripping many emerging markets, remains a latent risk in Mexico.
The one-year interest rate swap was steady following the GDP data’s release, suggesting investors had not altered bets on the direction of monetary policy.
Mexico’s finance ministry growth of about 4 percent this year and the central bank is confident inflation will fall steadily towards its 3 percent target.