Mexican and Canadian economic overview - August 21, 2006

General: The three NAFTA (North American Free Trade Association) members show divergent trends in their economic growth. Mexico's economy is strong, the US economy is slowing down perceptibly, and the Canadian economy experienced an exceptionally weak period from March – May. Mexico: GDP: driven by consumer demand and record exports, the economy grew at a yearly rate of 4.7% in Q2 compared to the same period last year. Record prices for oil exports and record numbers of exported vehicles are the principal reasons for the growth. Vehicle exports for the first seven months have risen to 886,152 units (+ 48%) compared to the same period of 2005. One strong caveat: 80 percent of all Mexican exports are destined for the US, where the economy is slowing down. Interest Rate: the benchmark lending rate is at 7%, a two year low Consumer Prices: + 3.1% annualized in July Consumer Spending: + 6.4% in Q1 compared to the same period of 2005 Industrial Production: + 6.9% in June compared to the same month 2005 Trade Balance: - $4.2 billion June (latest twelve months) Current Account Balance: - $1.2 billion Q1 (latest twelve months) Currency: Pesos 10.8 to US$1 August 16 (Pesos 10.6 to US$1 a year ago) Crude Steel Production: 1,320K mt (estimated) compared with 1,360K mt in May Canada: GDP: no growth (0.0%) in May compared to April; April: + 0.1% over March, March: + 0.1% over February, May 2006: + 2.6% compared to May 2005. The energy sector declined by 1.5% in May, the construction industry dropped by 1.2% in May, and residential construction was down by 3.7% in May. Industrial Production: May 2006: - 0.5% compared to April; - 0.4% compared to May 2005 Consumer Price Index: + 2.5% in June (+ 1.7% a year ago) Unemployment: 6.4% in July (6.8% year ago) Trade Balance: + $60.2 billion in June for the latest twelve months Currency: CA$1.12 to US$1 August 16 (CA$1.21 to US$1 a year ago) Steel Shipments: In the first five months of 2006 the Canadian steel industry shipped 6,459,424 mt of rolled steel products, of which 1,479,512 or 22.9% went to the US. Crude Steel Production: 1,305K mt in June