Weekly Report - 25 February 2010 (WR-10-08)

MEXICO | GDP in 2009. On 22 February the official statistics agency, Inegi, reported that real GDP contracted 6.5% year-on-year in 2009. Although this result was a bit better than the Organization for Economic Cooperation and Development (OECD) had forecast, it was still the worst annual contraction since records began. The figures would have been worse but for a timely (1.8%) increase in agricultural output in 2009. This offset a 7.3% drop in industrial output and a 6.6% fall in services. The government highlighted the fact that in the fourth quarter GDP grew by 2.03% quarter-on-quarter (q-o-q), led by a strong rebound in industrial output, which grew by 3.05% on a q-o-q basis. The 2009 recession was almost 10% worse than the previous worst year of 1995, when a devaluation-prompted collapse resulted in an annual contraction of 6.2%.
  
MEXICO | Forecasts. The government is forecasting only moderate growth over the next 15 years. This sobering forecast came from the energy ministry, which is assuming that the annual rate of growth will be only 2.7%. Economic commentators were quick to compare Mexico's weak long-term forecast with Brazil's assumption that its economy will grow by 5% a year between 2008 and 2017. China's economic planners assume that the economy will continue to grow at 9% a year for the foreseeable future. Mexican officials argue that the crisis of 2009 has left them with a lot of surplus generating capacity which means that they can afford to take a very cautious view of GDP growth.  The gloomy figures come from the Prospectiva del Sector Eléctrico 2009-2024, drawn up by the energy ministry (Sener). The plan has two scenarios, a low growth one, which assumes annual GDP growth of 1.7%, and a high growth one, which assumes a growth rate of 3.4%.

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