*Updated Oct. 8*
Guadalajara -
Mexico's economy is in the "deepest part of a downturn" which began late in 2012, Bank of America Merrill Lynch warned on Friday.
Carlos Capistrán, chief economist for BOA-ML's branch in Mexico, said the country faces the risk of recession if the second half of the year does not post significant improvements over the first.
On August 20 Mexico's internal revenue and budget planning secretary said the national economy is contracting, not expanding, and predicted 2013 growth would be 1.8% at best. Several major banks quickly followed suit, with some offering a worse prognosis. A day later the Latin American director of Moody's Investor Service said Mexico's chronically anemic expansion raises serious questions about the national economy and its capacity for growth, in the short and long terms alike. Sluggish Mexican economy worries foreign investment experts.
Despite early optimistic predictions from both the president and the chair of Banixco, Mexico's central bank, the economy has tanked. Growth through June 30 was 1.25% - one-third of the same period in 2012. Officials report that in the second quarter of 2013 gross domestic product, a measure of the entire national output of goods and services, fell 0.74% from the first. The internal revenue secretary attributes much of the problem to soft demand from the United States, Mexico's main trading partner. Many analysts contend Mexico remains far too dependent on American trade.
By contrast, the U.S. economy grew about 2.5% in the first semester of this year, far exceeding dire predictions offered by Mexico's central bank. Banxico chief: grim prognosis for U.S. economic growth.
When president Enrique Peña Nieto delivers his first state of the union address on Monday morning, his main topics will be the sputtering economy, teacher strikes staged by powerful labor unions which have kept millions of children at home, and of course Mexico's relentless security challenges, which show no sign of abatement nine months after he took office on a promise to quickly reduce violence.
Sept. 2 - Over the weekend internal revenue secretary Luis Videgaray firmly denied Mexico is in or is approaching a recession. "The economy is growing, but just at a slower pace," he told the press.
Sept. 12 - Mexico is clearly in a recession, a National Action Party deputy said yesterday after an appearance by secretary Videgaray in the country's lower legislative chamber. However ones views the evidence, the Hacienda's top boss announced that the PRI government will step up government spending in an effort to jump start the sluggish economy in the final quarter of the year.
Sept. 18 - Mexico is in full recession, with major pension and social service funds "broke"
Oct. 8 - Wal-Mart sales in free fall a good barometer of a Mexican economy on the skids
Oct. 20 - Baja Santander pronóstico de crecimiento para México
Aug. 24 - Mexican unemployment stats paint a bleak picture for the most well educated
July 29 - 53.3 million - that's how many Mexicans live in poverty
June 21 - Banixco raises storm flag warning on Mexican economy
June 12 - 59% of Mexicans remain trapped in underclass
July 2 - Peso, dollar remain volatile; Banixco has $166 billion USD banked abroad
June 12 - As peso continues its slide, Peña Nieto puts a trillion of them on the table
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