US' NAFTA trading partners continue to muddle through recession, with Mexico bearing the brunt

Mexico: The first half of 2009 was nothing short of a disaster for Mexico in economic terms. In Q2, GDP saw its biggest quarterly decline since 1980. Though the outlook for the second half seems to be slightly better, the overall contraction for the year will be around -7.5% for Latin America's second-largest economy. This is in stark contrast to the largest economy in Latin America, Brazil, where the economic output is expected to shrink a scant -0.3% according to latest estimates. President Calderon is pushing for a free trade agreement with Brazil in order to diversify destinations for Mexican exports. So far, 80% of Mexican exports were destined to the US. Crude oil output in July was down -7.8% compared to last year to 2,561 barrels per day. Natural gas output grew by +2.2% to 7.1 billion cubic feet per day. Automotive production in July fell less than in the two previous months, and Volkswagen of Mexico was able to quickly settle a strike at its car manufacturing plant.

Canada: GDP contracted for the tenth straight month in May. Car production in July was still falling, though less severely than in the previous month. The government is under pressure to come up with a Canadian version of "cash for clunkers," or at least to come up with a program that gets closer to the US version of a $4,500 refund. So far, Canadians may scrap their cars built in 1995 or before and receive a discount of C$300.00 (US$273.00). Not surprisingly, this incentive has not triggered a lot of new car buying activity.

General Data:

 Automotive and Steel Production

Total Intra Nafta Steel Shipments Apr 2008-May 2009 in Thousands Metric Tons