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Weekly Report - 4 November 2003

Tracking trends...

GROWTH OUTLOOK | Bank lowers forecast, again. The Banco de México last week lowered its economic growth forecast for this year to 1.5%. This is the third reappraisal this year; after an early downgrade from 3% to 2.4%, in July it had trimmed this to `around 2%'. The bank's research director, Manuel Ramos, says that the `base scenario' for next year is of growth between 3% and 3.5%. The latest lowering comes despite signs of improvement in the US economy. These, the bank notes, did not extend to manufacturing, the sector which most directly impinges on the Mexican economy.

EMPLOYMENT | Downturn continues in manufacturing. Employment in Mexico's manufacturing sector in August was down 4.3% year-on-year, which left the decline for the first eight months at 3.6%. All branches of manufacturing registered job losses. Worst of all were metal products (-9.1%), textiles & apparel (-6.9%) and wood products (-5.5%).

In the maquila (assembly) sector, most closely linked to the US economy, employment in August was down 4% in the year, taking the eight-month total down 0.3%. Worst declines: footwear & leather (-26.1%), toys & sport goods (-17.9%), textiles (-14.2%).

REMITTANCES | Year's total to exceed forecast. Remittances from Mexican expatriates, mostly in the US, will this year reach US$14.5bn, or US$1.5bn more than the Banco de México forecast. The prediction comes in a report which notes than about 18% of Mexico's adult population, some 11m people, receive remittances from relatives working abroad -- and that there is practically no town in Mexico where someone is not a recipient. The data was presented at a forum organised by the IDB's Multilateral Investment Fund (MIF).

In the first nine months of this year remittances have totalled US$9bn, not far below the US$9.8bn registered for the whole of 2002. The report ventures that within five years remittances could reach an annual US$20bn. One of the factors encouraging this projection is the imminent lowering of remittance costs which will accompany the introduction of the ACH automatic transfer system, and the development of Bansefi's `popular banking' network.

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