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With friends like these … U.S. economic impact on Mexico

5 October 2009

Agence Press-France, via Raw Story:

In its economic forecasts published Thursday, the IMF [International Monetary Fund] said that Latin America had begun to recover from the global economic crisis and would post growth of 2.9 percent in 2010.

But there were wide disparities, with countries such as Mexico, which depends heavily on the United States, losing out and others like Brazil benefiting from rising exports to China.

In its economic forecasts published Thursday, the IMF said that Latin America had begun to recover from the global economic crisis and would post growth of 2.9 percent in 2010.

But there were wide disparities, with countries such as Mexico, which depends heavily on the United States, losing out and others like Brazil benefiting from rising exports to China.

The economist said that generally the region’s economic health depends on the degree of economic links to the United States, saying Colombia, Brazil or Argentina were at a safer distance.

Mexico, which is a partner with the United States and Canada in the North American Free Trade Agreement, is like Central American and Caribbean countries, many of which have free-trade pacts with Washington, in that it relies on remittances from emigrants in the world’s largest economy.

It also appears to depend on the economy’s closeness to the IMF… Bolivia and Ecuador (which told the IMF to shove it).

The countries taking the brunt of the U.S. downturn (Mexico, Peru and Colombia being the big ones) are also those with conservative “neo-liberal” administrations.

In Mexico, there were sporadic attempts to broaden the export market to other countries.  Vicente Fox, at his most effective, was a salesman for Mexico, though he seemed to have trouble closing deals.  The “dangerous populist left” in the last election had suggested broadening Mexican exports and a more pan-Latin American market, but, of course, was beaten back and kept from taking power.

The neo-liberal administration — faced with the huge downturn — has offered only the standard “conservative remedies” — some minor budget cuts and increased sales taxes, as well as cancellations of large-scale development projects.

The latter (such as cutting off federal funding for expanding Mexico City’s Metro) are seen as “short sighted”, even by
Concamin (“la Confederación de Cámaras Industriales,” basically the national manufacturers’ association). While the association, of course, sees more manufacturing jobs as THE basic answer, one long-range solution to the crisis in their view is better tax collection, according to the group’s trade journal, Pulso.  When business guys are looking to help the tax man, it’s news.

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