Weekly Report - 22 July 2003

Mexico's finance minister, Francisco Gil, admitted last week that his 3% economic growth target for this year will prove difficult to meet. Most independent analysts reckon that 2% growth is more likely, and the central bank is forecasting 1.8%. Gil said that the problem was the sluggish growth in the US: the Federal Reserve has just clipped its growth forecast by 0.75 points, to between 2.5% and 2.75%, for this year. 

The slow rate of growth has led labour minister Carlos Abascal to admit that the country is unlikely to create the 300,000 jobs it had hoped for. 

Since President Vicente Fox took office, the workforce has increased by 3%, to 40.3m people: the number of unemployed has risen from 612,000 to 890,000. 

Despite the problems, the government says that it is doing better than other countries in coping with the slowdown in the US. This is moot: Costa Rica, just to take one example, is actually growing quite lustily (around 5%) despite the fact that 50% of its exports go to the US. Over 85% of Mexico's exports go to the US. 

The US government has imposed anti-dumping duties (of up to 119%) on Mexican and Brazilian steel wire. The US Department of Commerce claimed that Mexico and Brazil, and three other countries, were exporting the wire to the US at prices that were lower than those in their domestic markets. Mexican steel wire faces 77% duty; Brazil must pay the higher rates. 

The Department also claims that a Mexican company, Cablesa, increased exports of steel wire to the US before the decision: as a result all its US customers will have to pay retrospective duties on all their purchases from Cablesa after 1 April. 

Mexico exported 27,005t of steel wire to the US in 2002 and 9,592t in the first four months of this year. 

The US decision on steel wire came on the same day that the World Trade Organization (WTO) ruled that US anti-dumping duties on another 10 steel products, imposed last year, were unjustified and illegal.