On 22 April the IMF published its World Economic Outlook which forecast that the economy would contract by 3.7% in 2009. Only The Bahamas, with a 4.5% contraction, is forecast by the IMF to do worse in the Western Hemisphere. The IMF forecasts the US will contract by 2.8% in 2009.
The consensus amongst independent analysts polled by the Banco de México is for the economy to contract by 3.3% this year. Some long term Mexico-watchers, such as Alfredo Coutiño, now at Moody's, a credit rating agency, expect a contraction of between 4% and 6%.
Industrial production showed a 13.2% year-on-year decline in February. This was the biggest year-on-year drop since April 1995. In calendar 1995, GDP contracted by 6.2%. The big worry for policymakers was the 16.1% year-on-year fall in manufacturing output. Even electricity demand was down by 6.5%.
The central bank says that the current economic crisis is the worst for six decades. The bank is clearly not bothering about inflation, which is still running at around 6% a year. The recent strong showing by the peso (which recovered to M$13.2 against the dollar on 22 April from M$15.5 on 9 March) will help to lower inflation, but will not boost Mexican exports.
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