Mexico’s GDP Slowing to a Halt

In 2009, Mexico’s GDP growth is likely to stay below 1.0% as US industrial production, especially in the auto industry, drops. Credit Suisse expects GDP to expand just 0.6%, Merrill Lynch expects a 0.4% increase and JPMorgan sees no growth at all. Merrill says that US industrial production will decline 6% in 2009, hurting Mexico. Since 80% of Mexican auto industry exports go to the US, Merrill expects the slowdown in the US to hurt consumer spending, dent employment levels, cause a drop in real wages and a decrease in worker remittances to Mexico next year. Credit Suisse expects Mexico’s industrial output to contract by 2.2% in 2009, compared to a fall of 0.3% in 2008. Analysts expect Mexico to expand by as little as 1.3% this year, down from 3.2% in 2007.