Weekly Report - 14 October 2003

ECONOMIC GROWTH | Slim sees three years of growth. Carlos Slim, owner of the Grupo Carso and reputedly the wealthiest man in Latin America, predicts that Mexico will have three years of growth at an average rate of 3%, `whether we want to or not'. This, he says, is because the country enjoys a set of favourable conditions it had not seen for years, such as record low interest rates and the highest-ever level of international reserves.

The finance ministry recently lowered its growth forecast for this year, originally 3%, to 1.5%, and ventured that the rate next year would be 3.5%.

Slim's intention was to portray a good short-term outlook. His forecast, though, does not look all that favourable when set against the 5% average cited as necessary by Elena Zúñiga, head of the population council, if Mexico is to create enough jobs for new entrants to the labour market. She noted that Mexico will have a `population bonus', with a predominantly young population, for the next 30 years.

INVESTMENT | Perking up in construction, still low in industry. Gross fixed investment in Mexico in the first seven months of the year was 1.5% lower than in the comparable period of 2002. This overall figure was the result of a 5.6% decline in investment in machinery (most marked in domestic purchases) and a 3.4% increase in investment in construction. The July results show a slowing of both the downturn in machinery and the upturn in construction.

In both areas the comparisons are made against a low starting-point. Last year gross fixed investment contracted by 1.3%.