Mexican President Vicente Fox is in Santiago, Chile for the Group of Rio summit, while back at home economists are expressing concern about a sharp downturn in economic growth. The Fox government is trying to maintain optimism in face of the bad news.
For the first time in five years, Mexico's economy has stalled. The Finance Secretariat on Wednesday announced that growth in the second quarter of this year was at zero, the result of a slowdown in the United States, which is Mexico's chief trading partner.
But President Fox says that a little quick math shows things still are not all that bad. "Taking into account the 1.9 percent growth in the first quarter, Mexico still has a growth rate of close to one percent for the first half of the year," he said.
Meanwhile, Labor Secretary Carlos Abascal says he does not expect further job losses this year as a result of the slowdown. He says Mexico lost 216,000 jobs between January and July, but he says he is now looking at recovering jobs, not losing more.
But some Mexican economists say the government is only trying to put a better face on a situation that is likely to continue as it is for some time. They note that the economic downturn in the United States is likely to continue in the months ahead and that this will have a negative impact on Mexico, since 80 percent of the country's exports go to the United States. Even assuming that there will be a recovery in the U.S. economy before the end of this year, they say the effects of the slowdown will continue to be felt south of the border for some time to come.
The zero-growth report for the second quarter ended a 21-quarter run of growth that began in 1996 as Mexico was recovering from a severe devaluation of its peso currency.