Economic overviews of Mexico and Canada – October 12, 2007

Friday, 12 October 2007 09:12:42 (GMT+3)   |  
       

MEXICO:

General: President Calderon finally got his hard-earned tax reform through the legislature. It will increase the government's tax take from 10 percent to 12 percent of the GDP. Taxes were cut for cash strapped Pemex, the state oil monopoly. The reform will enable the government to keep its promise of boosting public investments by 50 percent.

The slowing down of the US economy could be problematic since 70 percent of Mexico's exports go to the US. Banco de Mexico kept the benchmark interest rate at 7.25 percent for the fifth month in a row. The credit market as well as the housing sector remain solid and have not been affected by the problems north of the border.

GDP: +2.8% in Q2. Bank of Mexico officials now predict GDP growth of only 2.98% for 2007. This revision takes into account fewer exports to the US.

Consumer Prices: +4.0% in August, down from 4.14% in July

Industrial production: +2.4% in July

Unemployment: 3.9% in August

Trade Balance:  -$0.8 billion as of July for the latest twelve months

Currency: Peso 10.6 to US$1 as of September 26 (Peso 11.0 to US$1 a year ago)

Steel Production:  1.38 million mt in August, or 1.7% ahead of last year. In the first eight months of 2007, 11.332 million mt were produced or 6.6% ahead of last year.

Automotive Production: 219,029 units were produced in August, or 20.4% ahead of last year. In the first eight months of 2007, 1,381,141 units were produced, or 2.0% more than last year. As of the end of August, Mexico is the only NAFTA country with a positive growth in the automotive industry.

CANADA:

General:  Ten years of budget surpluses and a consistent current account surplus have put the Canadian economy on solid ground, even though the growth is less than spectacular. On September 21, the Canadian dollar (the "loonie," so named after the aquatic bird on the dollar coin) briefly went through the parity threshold and overtook its American counterpart in value. Since then, the two currencies are more or less at par. Canada's exports to the US might be adversely affected by this otherwise proud moment.

GDP: +2.5% as of July for the past 12 months

Consumer Prices: +1.7% in August

Industrial Production: +0.3% in June

Unemployment: 6.0% in August

Trade balance: +$47.9 billion as of July for the latest twelve months

Currency: C$1.01 to US$1 as of September 26 (C$1.11 to US$1 a year ago)

Steel Production: 1.420 million mt were produced in August, or 30.0% ahead of last year. In the first eight months of 2007, 10.922 million mt were produced, or 4.6% ahead of last year.

Automotive Production: 213,200 units were produced in August, or 11.1% less than 2006. In the first eight months of 2007, 1,726,720 units were produced, or 1.6% less than last year.


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