Guadalajara -
The governor of Mexico's central bank offered a bleak assessment of the U.S. economy today, and suggested that there may be virtually no growth in the year just ahead.
The Bank of Mexico is the nation's lender of last resort, and the functional equivalent of the U.S. Federal Reserve.
Agustín Carstens has been the governor of Banixco since Jan. 1, 2010. He holds a Ph.D. in Economics from the University of Chicago, and is married to an American citizen. In 2012 Carstens was considered for managing director of the International Monetary Fund. In 2011 he was included in the 50 Most Influential Persons ranking of Bloomberg Markets Magazine.
During an Economic Perspectives Forum sponsored by the Autonomous Technological Institute of Mexico, Carstens said that the U.S. economy at best could be expected to grow 1.9% in 2013, which he attributed in part to the last minute avoidance of the fiscal cliff on Jan. 1.
But with the debt ceiling battle looming on Capitol Hill, growth could fall to virtually zero, according to Carstens. "There is an uncertainty factor which will affect North American businesses - and us," he said in remarks to the forum today. (Dec. 27, 2011 - If approved, latest budget ceiling increase will push U.S. debt to GDP ratio over 100%).
The new administration of Mexican president Enrique Peña Nieto predicts that the nation's economy will grow about 3.5% in fiscal 2013, considerably better than the U.S. economy has performed in recent years. But not all have been beneficiaries of business expansion. Just yesterday the country's secretary of social development reported that Mexico's impoverished grew by more than 11% since 2010, with 13 million citizens now living in extreme conditions, often without adequate nutrition.
In one small respect Mexicans have benefited from U.S. economic woes. The dollar began sliding against the peso on Dec. 31, and continued to do so through today, closing at 12.65. The dollar has moved in a direction not anticipated by many experts in the last quarter of 2012 (Dollar falls against peso as U.S. goes over fiscal cliff ). At the same time Mexico's stock market is on fire, breaking many historic records.
Although the final figures have not yet been compiled, most analysts agree that Mexico's economy grew by 3.5 - 4.0% in 2012, a performance which Carstens today characterized as "very favorable."
Jan. 30 - Mexico's Secretaría de Hacienda y Crédito Público - a federal agency equivalent to the U.S. Internal Revenue Service, Office of Management and Budget and Congressional Budget Office rolled into one - delivered a better than expected year end report for 2012 today. The country's economy grew exactly 4% last year, comfortably exceeding the projected 3.5%. The rate of inflation was 3.7%.
Mar. 25 - Mexico's economy grew 3.24% in January, the National Institute of Statistics reported today, well on track to a projected annual expansion of 4% in 2013. That's quite likely to beat U.S. growth this year.
Apr. 26 - Carstens may or may not have been accurate in his prediction about U.S. economic growth in 2013. The stats are in today for the first quarter, and they're somewhat better than expected: 2.5%, boosted by strong consumer spending. Of course, that's just the first three months of the year. Much could happen in the remaining nine.
June 20 - Mexican stock market takes the down elevator with Dow
June 21 - Banixco raises storm flag warning on Mexican economy
Jan. 28 - Mexican peso "well anchored," says central bank director
July 31 - Mexican economy grew at more than double the U.S. rate in second quarter of 2012
Dec. 31, 2011 - Risk of a "catastrophic event" in 2012 has increased, says Mexico's central bank
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