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Hitting bottom?

21 August 2009

Mexico’s 10.3 percent drop in GDP (the largest in Latin America) is the worst quarterly drop on record.  The second worst was last quarter.  Leading the decline was a 16.4 percent decline in manufacuring, mostly spurred by lowered exports to the United States.  Construction was also down by 9.3 percent.  Tourism, already battered by alarmist reports about the narcotics trade (which probably held its own over the last two quarters) took a beating during the H1N1 panic.  As a result of the H1N1 outbreak, schools were closed for two weeks, which required schools to stay open an extra two weeks over the summer break, cutting into domestic vacation spending.

Commerce, as a whole dropped a whopping 20.9 percent (except maybe the narcotics trade, which doesn’t share income data with government agencies.

Pedro da Costa and Jason Lange at Reuters state that “Mexico is on track for its most severe recession since the 1930s,” but the news may not be all bad.  While it’s not much consolation if your income is dropping (like most of ours are), the inflation rate is low, and the peso has not slid as far as most economists feared.

What goes down might be going back up, but there are some upsides to all this… and as soon as I think of some, I’ll post something.

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