Weekly Report - 24 February 2004

GROWTH OUTLOOK I | Farming & mining looking better. The IGAE index, which usually foreshadows GDP calculations and serves as an indicator of short-term trends, shows a 3.9% year-on-year increase in December. This time round, the national statistical institute had already come out with early figures for last-quarter and full-year growth (2% and 1.3%, respectively).

In December the sector showing the highest y-o-y growth was agriculture (8.6%), not habitually a star performer in Mexico. The services expanded by 4.2% and industry by 2.4% overall ( with mining up 4.8%, construction 3.7% and manufacturing only 2.4% — while electricity, gas & water was actually down 2.4%). The good result in farming reflected increased sowings for the spring-summer cycle.

GROWTH OUTLOOK II | Fox & Ceesp issue rival appraisals. President Vicente Fox last week surprised many by saying that the economic growth rate was slowly `approaching 7%' — the rate he had promised during his electoral campaign. This is the way he worked it out: `Economic growth is improving, not as much as we'd like, but roughly as follows: 2002, 1% growth; 2003, 2% growth; 2004, we're reaching 3% growth. So there we go, approaching 7%, little by little.' He also underlined that only a little more than a million Mexicans are unemployed (according to the official methodology), as against 41.5m who are employed.

Ceesp, the think-tank of the umbrella employers' association, produced a tighter review of growth so far under Fox: 2001, -0.3%; 2002, 0.9%; 2003, 1.3%. It also noted, `While it is true that GDP grew faster in the last two years, per-capita GDP, considered one of the main indicators of wealth, showed no improvement.' In real terms, Ceesp reports, per-capita GDP last year was US$1,431, slightly lower than the US$1,436 recorded in 2002.