The Governor of Mexico's central bank,Agustin Carstens,discussed the signs of Mexico's growing economy in an interview with Bloomberg last Tuesday,stating in no uncertain terms that he still expects the country’s economy to continue to expand in 2011,thanks to a stronger US economy,the recovery of domestic consumption and the continued influx of more private investment dollars into Mexico.
Mexico’s Gross Domestic Product (GDP),which is one of the most powerful indicators of an economy's performance,is expected to grow at a rate of up to five percent this year. As Latin America’s second largest economy,Mexico has been only mildly affected by slower US output and a late frost in early 2011. “Mexico’s private investment has lagged,but is recovering at a rapid rate that will stimulate growth,” Carstens said. “Banks are also more willing to lend,supporting consumption,construction and housing. I believe bank lending may also contribute to higher growth.”
In the first quarter of 2011 Mexico’s GDP has already grown 4.6 percent as compared to a year earlier,according to a report released on May 19th by the national statistics agency. This is fast approaching the 5 percent rise that was predicted by economists in a median of 17 reports compiled for a Bloomberg survey.
In addition,Mexico’s central bank raised its GDP forecast for 2011 to 5 percent,up from previous estimates of a 3.8 percent growth rate. Mexico’s peso also strengthened as the price of the country’s number one export - crude oil - rose and consumer prices declined in mid-May. In addition,the peso gained .5 percent to 11.6896 per US dollar on Monday of this week and has gained 5.6 percent against the dollar so far in 2011,making it the top performer among Latin American currencies.
“Fiscal equilibrium,a good balance of payments,record international reserves and well-capitalized banking systems are providing a lot of economic certainty going forward,” Carstens said.