Weekly Report - 30 September 2003

GROWTH PROSPECTS | Fourth-quarter upturn, maybe. Economic recovery in the US may begin to have an effect on Mexico towards the fourth quarter of the year, according to the central bank in a late- September review, which seemed more concerned about pay increases conspiring against the 3% annual inflation target. Two sets of data suggest that the economy is not yet gearing up for recovery. Trade figures for August show imports down 3.4% in the year, with purchases of intermediate goods, an indicator of industrial readiness, down 3.5%. [Exports were down 2.8%, with a 4.4% decline in non-oil sales offsetting an 11.8% increase in oil export earnings.] The economy ministry is now estimating that foreign direct investment this year may reach somewhere between US$10bn and US$12bn, `slightly lower than last year', according to minister Fernando Canales (actually, 12% to 26% lower).