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Weekly Report - 2 December 2003

Tracking trends...

GROWTH OUTLOOK | OECD sees rate `too slow'. The OECD, the club of `big economies' of which Mexico is the only Latin American member, expects Mexico's economic growth rate this year to be about 1.5%, rising to 3.6% in 2004 and 4.2% in 2005. It says its current long-term growth potential of about 4% is `too slow for a country with low levels of income and productivity and high rates of population growth, and too slow to narrow the gap with other OECD countries.' It should aim for a rate of 6%, says the organisation.

The OECD notes that `the wide-ranging structural reforms of the last fifteen years, including the entry into Nafta, have not yet led to an unambiguous rise in labour productivity growth.' To achieve the needed increase, it says Mexico must overcome several constraints, most notably the poor education and skill level of its workforce, the country's inadequate physical infrastructure and its low level of tax revenues.

EMPLOYMENT | Decline continues in manufacturing. Employment in the manufacturing sector in September was 4.3% lower than a year earlier, pushing the nine-month total down 3.7% year-on-year. The corresponding declines in the maquiladora (assembly) industries were 2.2% and 0.5%. By branch, the nine-month declines were strongest in metal products (-8.5%), apparel (-7.4%) and wood products (-5.9%).

REMITTANCES | Record in September. Remittances by Mexicans working in the US reached US$1.65bn in September, the highest figure for that month since records began to be kept in 1995. This has taken the total in the first nine months to US$9.94bn, 36% more than in the same period of last year — actually, 1.2% more than in the whole of 2002. 

Remittances in January-September, equivalent to 79% of oil export earnings, were Mexico's second source of hard-currency inflows, ahead of tourism and foreign direct investment.

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