Mexico Economy to Shrink 8.5%; Most In 77 Years; Most Since 1932!!! Goldman Says

[ByLoSellHi]

Green shoots, baby! Everywhere you look!

"I spread this amount of green shoot, goldilocks bullshit before I even eat breakast."

Mexico Economy to Shrink 8.5%, Goldman Sachs Says

http://www.bloomberg.com/apps/news?pid=20601086&sid=aPaQAdI3bmuo&refer=latinamerica

By Valerie Rota and Carlos Manuel Rodriguez

May 29 (Bloomberg) -- Mexico’s economy will contract this year by the most since 1932 as a slump in the U.S. curbs demand for exports and slows dollar flows from tourism and remittances, Goldman Sachs Group Inc. said.

Gross domestic product will tumble 8.5 percent this year, Paulo Leme, chief Latin America economist at Goldman Sachs in Miami, wrote in an e-mailed report today. That would be the biggest decline in GDP in 77 years, according to the nation’s statistics agency. Goldman Sachs previously forecast Mexico’s economy would shrink 4.8 percent in 2009.

Mexico’s economy will shrink more this year than it did during the Tequila Crisis of 1995, when a devaluation of the peso the previous year sparked capital outflows throughout the region, according to Goldman Sachs. While the peso’s slump in 1995 allowed Mexico to boost exports to the U.S., Goldman Sachs is betting demand for Mexican goods will take longer to recover in 2009 because of the recession in the world’s largest economy.

“It is hard for investors to fathom such a severe collapse in economic activity,” Leme wrote. In 1995, “external economic conditions were much more favorable than they are now.”

The U.S. is Mexico’s biggest trading partner, buying about 80 percent of Mexican exports.

The decline in Mexico’s GDP forecast by Goldman Sachs is bigger than the slump estimated by the government and commercial banks including Bank of America Corp., UBS AG, Citigroup Inc., HSBC Holdings Plc and Credit Suisse Group. Goldman Sachs is predicting Mexico will shrink more than Argentina, Brazil, Chile and Colombia, according to the report sent today.

Swine Flu

Goldman Sachs revised its estimate after a government report this month showed the first quarter contraction was bigger than analysts forecast and the largest since 1995. The slump in Mexico will continue into the second quarter as the outbreak of the swine flu cuts 0.5 percentage point from GDP, according to Goldman Sachs.

Mexico will post a $9.3 billion deficit in its current account this year and a $1.5 billion surplus in its capital account, Leme wrote. He is forecasting the peso to appreciate to 12.9 per dollar over the coming 12 months.

Goldman Sachs predicts the economy will grow 4.3 percent in 2010, more than its previous estimate of a 1.4 percent expansion, as the projections incorporate “a more benign external economic environment,” Leme wrote.

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.
Last Updated: May 29, 2009 17:45 EDT

 

[misterno]

Texas should build its own border wall otherwise we will have thousands of mexicans coming

 

[pupu]

Nothing can stop the mexicanization of the southern states and the drug wars that will follow.

 

[peilthetraveler]

Quote from misterno:

Texas should build its own border wall otherwise we will have thousands of mexicans coming

When the U.S. economy collapses, do you really want a wall keeping YOU out of mexico?

I knew a mexican illegal alien who came here about 4 years ago with her kid for a better life. After she came here, she got married to a citizen. I just got word last week, that she left and went back to mexico for a "better" life! I kid you not!

This is how you know its getting bad...when the mexicans are leaving the U.S. cause they think they can do better there!. I guess making 300 bucks per month in mexico is better than sitting around unemployed here with no chance of getting that housekeeping job now that white english speaking people are starting to take those jobs.

 

[TorontoTrader2]

Quote from misterno:

Texas should build its own border wall otherwise we will have thousands of mexicans coming

It could look something like this, another Gaza h-ll. Is that the moneychangers' plan to USA, too?

Psst, even if our camp is open air and they tell us we have freedo, it's still a concentration camp.

 

[saxon22]

Quote from peilthetraveler:

When the U.S. economy collapses, do you really want a wall keeping YOU out of mexico?

I knew a mexican illegal alien who came here about 4 years ago with her kid for a better life. After she came here, she got married to a citizen. I just got word last week, that she left and went back to mexico for a "better" life! I kid you not!

This is how you know its getting bad...when the mexicans are leaving the U.S. cause they think they can do better there!. I guess making 300 bucks per month in mexico is better than sitting around unemployed here with no chance of getting that housekeeping job now that white english speaking people are starting to take those jobs.

Life in Mexico is sweat if you are smart enough to have your own business. I have met people who came to US worked hard 3, 4 even 5 years and with the money saved went back and opened up a business. I personally know one who with around $30 grand opened a 50 computer internet cafe and is clearing 5000 a month minimum with some months (end of the school year) getting as much as 8000. Those figures are after all the expenses to boot.
Now you tell me why would he want to stay in NYC and work in a Pizzeria for $400 a week working 6 days a week 12 hours a day?