It is not the exception in the case of Mexico and in the last five months, has been reported the closure of 15,000 SMEs with an estimated loss of more than 30,000 jobs. In relation to monetary policy that comes forward carrying the Banxico, the same is located in line with the objective of stimulating economic activity. In this sense, the Undersecretary of the Ministry of finance and public credit (SHCP), Alejandro Werner confirmed recently that the entity will continue with cycle of cutting rates to shore up economic recovery: there is no inflationary pressure. Bank of Mexico has made it clear that it will continue to cut interest rates. The reference interest rate is currently at 6.75% and there is the expectation that the end of the year at 5%, although the context is not as clear as for enabling this is concrete.
Despite statements by Werner, the market does not show optimistic about inflation expectations. According to the participants of the survey conducted by Banxico on expectations of inflation, it will be located in 4.25% by the end of 2009. Monetary policy is undoubtedly under tension in Mexico, since the need to assist economic recovery in a context where inflation expectations are kept, it has to deal with Exchange rate depreciation that has caused him to lose a good proportion of international reserves. In the first quarter of the year, Banxico lost US $6.437 billion international reserves, mainly in its effort to support the value of the peso against the dollar. The continuity of the rate cut cycle generates pressures towards exchange-rate depreciation which oblige greater efforts by Banxico to sustain weight Mexican. In this context, yesterday, Mexico asked the IMF US $47,000 million to among other objectives, bolster the country’s international reserves to avoid speculative against exchange rate actions and restore confidence. The only announcement of the agreement came an appreciation of 2.09% of the Mexican peso, which stood at 13,92 units per dollar.
No doubt that the situation of the Mexican economy is more than a complex. And while the Government of Felipe Calderon has already launched several packages of measures, they don’t seem to generate an effect clear to stop the deterioration of the economy. As the center of economic studies of the private Sector (CEESP) are still observed major shortcomings in the implementation of countercyclical measures announced, in some cases, since last year, such as the construction of a new refinery of Petroleos Mexicanos (Pemex). The Government of Felipe Calderon must hurry and improve effectiveness in the implementation of the measures anti-crisis if you intend to stop the deterioration in the economy. The Mexican GDP growth projections are still correcting down. The World Bank predicted that it expects a contraction of Mexican GDP of 2% for this year. In Mexico, analysts are more pessimistic than the Bank itself. In the survey carried out the Banxico, surveyed analysts expressed expect a contraction of the Mexican economy of 3.3 percent for this year. The Mexican economy requires a more forceful action by the Calderon Government to arrest his fall. The Mexican Government is constantly working on new actions to stimulate economic activity with various initiatives. So for example, SMEs and the export sector are at the center of the new efforts to regain economic activity. Do they suffice the various countercyclical measures to avoid recession in the Mexican economy or we should expect positive signals from the United States?