Mexico: “disaster” shrinks economy 8.2%

On May 20 the Mexican government’s National Institute of Statistics and Geography (INEGI) announced that the country’s gross domestic product (GDP) fell by 8.2% in the first quarter of 2009 compared to the same period the year before. The next day Salomon Presburger, president of the Concamin business organization, told a Mexico City press conference that the country had already lost 300,000 jobs in 2009 and would probably lose a total of 600,000 during the year, half of them from the industrial sector, in which he expected a 12-13% contraction. He predicted that the numbers would be even worse when statistics come in on the effect of the H1N1 influenza (“swine flu“), which has caused at least 74 deaths to date, has reduced tourism and led many companies to shut down for a week in late April and early May.

Presburger noted Mexico’s close economic ties with the US, now suffering its worst economic crisis since the 1930s. “The collapse of orders coming from the US and the sudden weakening of domestic demand, associated with the fall in household consumption and business investment, explains the accelerated decline of the industrial sector,” he said. He compared the current crisis to the devastating recession that followed the financial collapse of December 1994. (EFE, May 21)

“[I]n 2009 we have lost what we gained over many years,” José Ángel Gurría Treviño, a finance secretary during the administration of former president Ernesto Zedillo Ponce de León (1994-2000), said in a press conference in Madrid on May 22, “so that this isn’t a cycle, it’s a disaster. This isn’t an evolution; it’s a demolition. And yes, we calculated it badly.” But he insisted that “we who created this problem…are the ones who have to fix it.” Gurría is now general secretary of the Organization for Economic Cooperation and Development (OECD), which includes 30 industrialized countries with a “free market” orientation; Mexico is the only Latin American member. (La Jornada, Mexico, May 23)

On May 20, the US-based Moody’s Investors Service called Mexico the “most vulnerable” among countries in the region. (Bloomberg, May 20)

From Weekly News Update on the Americas, May 24

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