Economic overviews of Mexico & Canada – January 5, 2009

Mexico: Global economic problems in general and the US recession in particular continue to pull down Mexico's economic performance. Inflation has exceeded the 6% percent level which will likely prevent the Central Bank from cutting interest rates. Industrial production fell in October yet again, for the sixth consecutive month of decline. Automotive production seriously contracted in November but still shows a slight gain for the year. The currency remains extremely weak and causes concern with Central Bank officials. It may be good for exports, but import prices are getting more expensive and will exacerbate inflationary pressures. In view of the current economic weakness, the Mexican government decided not to follow OPEC's (Organization of Petroleum Exporting Countries) production cutbacks and will keep its oil output steady. Remittances from Mexican workers outside the country, primarily the US, are expected to have declined by around 8.0% in 2008 from a peak of $24 billion in 2007.

Canada: The economy barely grew in October on a yearly basis and actually contracted slightly compared to September (-0.1%).  As the crude oil price drops, so does the "loonie." The Canadian dollar fell again in December and some experts expect it to be as low as 1.28 to the US dollar by the end of Q1 2009.As of November, automotive production was seriously down while steel production was surprisingly strong.

General Data:

Automotive and Steel Production

Total Intra-NAFTA Steel Shipments Jan-Sep 2008 in Thousands of Metric Tons