As economic conditions in the United States have faltered, the impact on the Mexican economy has been negative.  The short-term consensus projections for Mexico reflect this
and suggest that the downturn is not likely to loosen its grip on the Mexican economy until the second half of 2009 or even early 2010.  Panelist projections for real gross domestic product (GDP) in 2009 are consistently negative, ranging from a relatively moderate contraction of -0.8 percent to a fairly sharp decline of -4.0 percent.  The consensus GDP forecast anticipates GDP will shrink by -2.2
percent in 2009

Fullerton, Thomas M., Jr.

Molina, Angel L., Jr.

Munich RePEc Personal Archive

MPRAMunich Personal RePEc ArchiveFollow the leader: Mexico hurt by U.S.slowdownThomas M., Jr. Fullerton and Angel L., Jr. MolinaUniveristy of Texas at El Paso22. March 2009Online at http://mpra.ub.uni-muenchen.de/29918/MPRA Paper No. 29918, posted 8. April 2011 17:11 UTC Follow the leader: Mexico hurt by U.S. slowdown  As economic conditions in the United States have faltered, the impact on the Mexican economy has been negative.  The short-term consensus projections for Mexico reflect this and suggest that the downturn is not likely to loosen its grip on the Mexican economy until the second half of 2009 or even early 2010.   Panelist projections for real gross domestic product (GDP) in 2009 are consistently negative, ranging from a relatively moderate contraction of -0.8 percent to a fairly sharp decline of -4.0 percent.  The consensus GDP forecast anticipates GDP will shrink by -2.2 percent in 2009.  Although this outlook translates into negative growth for private consumption, the consensus rate of decline is less severe, at -1.1 percent.  For private consumption, there is less unanimity among the forecasters, with two predictions calling for slight growth as consumers dip into savings or increase household indebtedness. Nearly all of the panelists expect counter-cyclical fiscal policy to result in greater government consumption in 2009, with a consensus growth rate of 2.8 percent.  Total real fixed investment is largely expected to falter as a consequence of reduced cash flows and business profitability in 2009.  North of the border economic weakness translates into a double-digit decline for exports of goods and services.  Negative incomes growth is also anticipated to cause imports of goods and services to drop noticeably in 2009 in Mexico.   Against this general economic backdrop, an almost bi-modal outlook for inflation emerges from the panelists.  Three forecasts expect prices to increase at rates in excess of 6 percent, while two projections call for consumer price increases of less than 4 percent.  The consensus outlook for the peso per dollar nominal exchange rate is 14.32 for 2009, with a fairly tight clustering of the responses around that estimate.  A somewhat wider rage of responses emerges for 28-day Treasury Certificates (CETES).  Two forecasts anticipate that the rate will average 8 percent or higher in 2009, while two predictions call for these instruments to yield 6.5 percent or less for the year as a whole. All of the panelists expect the economy to expand by at least small amounts in 2010.  Private consumption is expected to keep pace with GDP.  Because growth is forecast to be moderate at best, the panel also anticipates that fiscal policy will remain mildly expansionary in 2010.  The recovery is expected to stimulate fixed investment in Mexico along with increased export and import volumes.  In spite of greater economic activity in 2010, consumer price inflation is projected to decline by 60 basis points to 4.5 percent.  The latter forecast undoubtedly reflects a stronger currency market performance by the peso, which is predicted to appreciate to 13.98 P/$ for the year as a whole.  The panel members expect monetary policy to be relatively neutral in 2010, allowing the 28-day CETES rate to hold steady at 7.1 percent.  Thomas M. Fullerton, Jr. and Angel L. Molina, Jr. University of Texas at El Paso Border Region Modeling Project   1st Quarter 2009 American Chamber México Dr. Deborah L. Riner Wells Fargo Bank Dr. Eugenio J. Alemán Center for Economic Forecasting of Mexico Dr. J. Alfredo Coutiño JP Morgan Chase Bank Dr. Alfredo Thorne BBVA Bancomer Octavio Gutiérrez Engelman Pedro Uríz                                Cecilia Posadas Universidad Autónoma de Ciudad Juárez Dra. Patricia Barraza de Anda Dra. Lisbeily Domínguez  El Colegio de la Frontera Norte Dr. Eduardo Mendoza Cota                   Dr. Eliseo Díaz Instituto Tecnológico y de Estudios Superiores de Monterrey Dr. Jorge Ibarra Salazar Universidad Autónoma de Coahuila                                         Dr. Alejandro Dávila Flores           2009 Mexico Consensus Economic Forecast 2009 Annual Percent Changes    GDP Private Consumption Government Consumption Total Investment Exports Imports Consumer Price Index Exchange Rate CETES 28 Day American Chamber Mexico -2.5 -2.8 2.3 -7.6 -19.1 -14.9 4.3 14.93 6.9 JP Morgan Chase Bank -4.0 n/a n/a -6.0 -3.0 -2.0 5.2 14.50 n/a BBVA Bancomer -1.8 -0.7 0.0 -3.0 -7.0 -5.2 3.6 13.90 5.8 Wells Fargo Bank -2.3 -2.1 2.7 -1.7 -3.3 -0.4 6.0 15.10 7.3 Center for Economic Forecasting of Mexico -0.8 0.4 2.3 0.5 -5.7 -4.9 3.5 14.52 6.5 UACJ -1.0 1.0 -1.0 4.0 5.0 4.0 7.0 14.00 8.0 ITESM -2.0 -1.0 1.0 1.0 -25.0 -10.0 4.5 14.50 7.5 COLEF -3.7 -2.8 10.0 -5.0 -12.0 -7.0 7.5 13.50 8.5 UAdeC -2.0 -1.1 5.0 -0.9 -24.0 -19.3 4.5 14.00 7.5           Consensus -- this quarter -2.2 -1.1 2.8 -2.1 -10.5 -6.6 5.1 14.32 7.2                    -- last quarter n/a n/a n/a n/a n/a n/a n/a n/a n/a                                                                     2010 Mexico Consensus Economic Forecast 2010 Annual Percent Changes    GDP Private Consumption Government Consumption Total Investment Exports Imports Consumer Price Index Exchange Rate CETES 28 Day American Chamber Mexico 1.3 1.1 1.3 4.4 -0.6 0.0 3.8 14.970 7.0 JP Morgan Chase Bank 3.4 n/a n/a 15.0 12.0 13.5 3.5 13.500 n/a BBVA Bancomer 1.1 2.1 2.0 -0.7 -0.6 0.8 3.7 12.850 5.0 Wells Fargo Bank 2.1 2.0 2.8 2.9 2.7 2.3 5.0 15.090 7.3 Center for Economic Forecasting of Mexico 3.0 3.5 3.0 6.9 4.3 3.9 3.4 13.610 6.3 UACJ 1.5 1.5 1.0 4.5 5.0 4.0 6.0 13.500 8.0 ITESM 1.0 2.0 3.0 4.0 10.0 5.0 4.0 14.000 7.0 COLEF 1.1 1.0 6.0 -2.0 2.5 -2.0 6.0 14.500 8.5 UAdeC 1.0 1.2 0.5 1.9 2.0 2.9 5.5 13.800 8.0           Consensus -- this quarter 1.7 1.8 2.4 4.1 4.1 3.4 4.5 13.980 7.1                    -- last quarter n/a n/a n/a n/a n/a n/a n/a n/a n/a                              Annual Averages Historical Data GDP (2003 Pesos, billions) Private Consumption (2003 Pesos, billions) Government Consumption (2003 Pesos, billions) Total Investment (2003 Pesos, billions) Exports (2003 Pesos, billions) Imports (2003 Pesos, billions) CPI June 2002 = 100  Nominal Exchange Rate Pesos/ Dollars CETES 28 Day 2008 8,928.6 6,220.0 930.5 2,050.6 2,710.2 3,057.6 129.2 11.14 7.68 Percent Change 1.35% 1.54% 0.59% 4.94% 1.40% 4.29% 5.13% 1.92%  2007 8,809.9 6,125.5 925.0 1,954.0 2,672.9 2,931.7 122.9 10.93 7.19 Percent Change 3.33% 3.86% 2.14% 7.17% 5.66% 7.00% 3.97% 0.28%  2006 8,526.0 5,897.8 905.6 1,823.3 2,529.7 2,740.0 118.2 10.90 7.19 Percent Change 5.13% 5.68% 1.72% 9.78% 10.94% 12.57% 3.63% -0.16%  2005 8,110.2 5,580.7 890.3 1,660.8 2,280.3 2,434.0 114.1 10.92 9.20 Percent Change 3.21% 4.78% 2.44% 7.46% 6.75% 8.48% 3.99% -3.29%  2004 7,857.7 5,326.0 869.1 1,545.5 2,136.1 2,243.8 109.7 11.29 6.82 Percent Change 4.00% 5.62% -2.76% 8.01% 11.50% 10.74% 4.69% 4.63%  2003 7,555.8 5,042.8 893.8 1,430.9 1,915.8 2,026.2 104.8 10.79 6.23 Percent Change 1.35% 2.22% 0.80% 0.37% 2.70% 0.70% 4.55% 12.05%  2002 7,455.0 4,933.1 886.7 1,425.6 1,865.5 2,012.2 100.2 9.63 7.09 Percent Change 0.83% 1.59% -0.33% -0.64% 1.44% 1.46% 5.03% 3.10%  2001 7,393.9 4,856.1 889.6 1,434.8 1,839.0 1,983.2 95.42 9.34 11.31 Percent Change -0.16% 2.48% -1.98% -5.64% -3.60% -1.63% 6.36% -1.27%  2000 7,405.5 4,738.7 907.6 1,520.5 1,907.6 2,016.1 89.71 9.46 15.24 Percent Change 6.60% 8.18% 2.38% 11.36% 16.28% 21.47% 9.50% -1.05%  1999 6,946.9 4,380.3 886.5 1,365.4 1,640.5 1,659.7 81.93 9.56 21.41           Note: 2008 Data are preliminary and subject to revision        *GDP: Producto Interno Bruto, INEGI, 2003 Pesos         *Private Consumption: Consumo Privado, INEGI, 2003 Pesos        *Government Consumption: Consumo de Gobierno, INEGI, 2003 Pesos       *Total Investment: Formación Bruta de Capital Fijo, INEGI, 2003 Pesos       *Exports: Exportación de Bienes y Servicios, INEGI, 2003 Pesos        *Imports: Importación de Bienes y Servicios, INEGI, 2003 Pesos        *CPI, Banco de México, Annual Average, Base = June 2002        *Exchange Rate, Banco de México, Peso-to-Dollar, Fecha de Liquidación, Annual Average      *CETES 28 Days, Banco de México, Annual Average               University of Texas at El Paso Diana Natalicio, President Richard Jarvis, Provost Roberto Osegueda, Vice Provost   UTEP College of Business Administration Robert Nachtmann, Dean Pat Eason, Associate Dean Steve Johnson, Associate Dean Tim Roth, Templeton Professor of Banking & Economics Border Economics & Trade   UTEP Border Region Modeling Project Corporate and Institutional Sponsors: El Paso Electric Company Hunt Communities Hunt Building Company Las Palmas & Del Sol Healthcare JP Morgan Chase Bank of El Paso Universidad Autónoma de Ciudad Juárez UTEP College of Business Administration UTEP Department of Economics & Finance UACJ Instituto de Ciencias Sociales y Administración                   México Consensus Economic Forecast, a quarterly publication of the Border Region Modeling Project, a research unit within the Department of Economics & Finance at the College of Business Administration of The University of Texas at El Paso, is available on the Web at: http://academics.utep.edu/border.  Econometric research assistance provided by Emmanuel Villalobos and Enedina Licerio.  For additional information, contact the Border Region Modeling Project - CBA 236, UTEP Department of Economics & Finance, 500 West University Avenue, El Paso, TX 79968-0543, USA. (915) 747-7775.  

English

Follow the leader: Mexico hurt by U.S. slowdown

Munich Personal RePEc Archive

MPRA
Munich Personal RePEc Archive
Follow the leader: Mexico hurt by U.S.
slowdown
Thomas M., Jr. Fullerton and Angel L., Jr. Molina
Univeristy of Texas at El Paso
22. March 2009
Online at https://mpra.ub.uni-muenchen.de/29918/
MPRA Paper No. 29918, posted 8. April 2011 17:11 UTC
 
Follow the leader: Mexico hurt by U.S. slowdown 
 
As economic conditions in the United States have faltered, the impact on the Mexican 
economy has been negative.  The short-term consensus projections for Mexico reflect this 
and suggest that the downturn is not likely to loosen its grip on the Mexican economy until 
the second half of 2009 or even early 2010.  
 
Panelist projections for real gross domestic product (GDP) in 2009 are consistently 
negative, ranging from a relatively moderate contraction of -0.8 percent to a fairly sharp 
decline of -4.0 percent.  The consensus GDP forecast anticipates GDP will shrink by -2.2 
percent in 2009.  Although this outlook translates into negative growth for private 
consumption, the consensus rate of decline is less severe, at -1.1 percent.  For private 
consumption, there is less unanimity among the forecasters, with two predictions calling 
for slight growth as consumers dip into savings or increase household indebtedness. 
Nearly all of the panelists expect counter-cyclical fiscal policy to result in greater 
government consumption in 2009, with a consensus growth rate of 2.8 percent.  Total real 
fixed investment is largely expected to falter as a consequence of reduced cash flows and 
business profitability in 2009.  North of the border economic weakness translates into a 
double-digit decline for exports of goods and services.  Negative incomes growth is also 
anticipated to cause imports of goods and services to drop noticeably in 2009 in Mexico.   
Against this general economic backdrop, an almost bi-modal outlook for inflation emerges 
from the panelists.  Three forecasts expect prices to increase at rates in excess of 6 
percent, while two projections call for consumer price increases of less than 4 percent.  
The consensus outlook for the peso per dollar nominal exchange rate is 14.32 for 2009, 
with a fairly tight clustering of the responses around that estimate.  A somewhat wider 
rage of responses emerges for 28-day Treasury Certificates (CETES).  Two forecasts 
anticipate that the rate will average 8 percent or higher in 2009, while two predictions call 
for these instruments to yield 6.5 percent or less for the year as a whole. 
All of the panelists expect the economy to expand by at least small amounts in 2010.  
Private consumption is expected to keep pace with GDP.  Because growth is forecast to be 
moderate at best, the panel also anticipates that fiscal policy will remain mildly 
expansionary in 2010.  The recovery is expected to stimulate fixed investment in Mexico 
along with increased export and import volumes.  In spite of greater economic activity in 
2010, consumer price inflation is projected to decline by 60 basis points to 4.5 percent.  
The latter forecast undoubtedly reflects a stronger currency market performance by the 
peso, which is predicted to appreciate to 13.98 P/$ for the year as a whole.  The panel 
members expect monetary policy to be relatively neutral in 2010, allowing the 28-day 
CETES rate to hold steady at 7.1 percent. 
 
Thomas M. Fullerton, Jr. and Angel L. Molina, Jr. 
University of Texas at El Paso Border Region Modeling Project 
 
 
1
st
 Quarter 2009 
American Chamber México 
Dr. Deborah L. Riner 
Wells Fargo Bank 
Dr. Eugenio J. Alemán 
Center for Economic Forecasting 
of Mexico 
Dr. J. Alfredo Coutiño 
JP Morgan Chase Bank 
Dr. Alfredo Thorne 
BBVA Bancomer 
Octavio Gutiérrez Engelman 
Pedro Uríz                                
Cecilia Posadas 
Universidad Autónoma de 
Ciudad Juárez 
Dra. Patricia Barraza de Anda 
Dra. Lisbeily Domínguez 
 
El Colegio de la Frontera Norte 
Dr. Eduardo Mendoza Cota                   
Dr. Eliseo Díaz 
Instituto Tecnológico y de 
Estudios Superiores de 
Monterrey 
Dr. Jorge Ibarra Salazar 
Universidad Autónoma de 
Coahuila                                         
Dr. Alejandro Dávila Flores 
 
         
2009 Mexico Consensus 
Economic Forecast 2009 Annual Percent Changes   
 GDP 
Private 
Consumption 
Government 
Consumption 
Total 
Investment Exports Imports 
Consumer 
Price Index 
Exchange 
Rate 
CETES 
28 
Day 
American Chamber Mexico -2.5 -2.8 2.3 -7.6 -19.1 -14.9 4.3 14.93 6.9 
JP Morgan Chase Bank -4.0 n/a n/a -6.0 -3.0 -2.0 5.2 14.50 n/a 
BBVA Bancomer -1.8 -0.7 0.0 -3.0 -7.0 -5.2 3.6 13.90 5.8 
Wells Fargo Bank -2.3 -2.1 2.7 -1.7 -3.3 -0.4 6.0 15.10 7.3 
Center for Economic Forecasting of 
Mexico -0.8 0.4 2.3 0.5 -5.7 -4.9 3.5 14.52 6.5 
UACJ -1.0 1.0 -1.0 4.0 5.0 4.0 7.0 14.00 8.0 
ITESM -2.0 -1.0 1.0 1.0 -25.0 -10.0 4.5 14.50 7.5 
COLEF -3.7 -2.8 10.0 -5.0 -12.0 -7.0 7.5 13.50 8.5 
UAdeC -2.0 -1.1 5.0 -0.9 -24.0 -19.3 4.5 14.00 7.5 
          
Consensus -- this quarter -2.2 -1.1 2.8 -2.1 -10.5 -6.6 5.1 14.32 7.2 
                   -- last quarter n/a n/a n/a n/a n/a n/a n/a n/a n/a 
          
          
          
          
          
          
        
2010 Mexico Consensus 
Economic Forecast 2010 Annual Percent Changes   
 GDP 
Private 
Consumption 
Government 
Consumption 
Total 
Investment Exports Imports 
Consumer 
Price Index 
Exchange 
Rate 
CETES 
28 
Day 
American Chamber Mexico 1.3 1.1 1.3 4.4 -0.6 0.0 3.8 14.970 7.0 
JP Morgan Chase Bank 3.4 n/a n/a 15.0 12.0 13.5 3.5 13.500 n/a 
BBVA Bancomer 1.1 2.1 2.0 -0.7 -0.6 0.8 3.7 12.850 5.0 
Wells Fargo Bank 2.1 2.0 2.8 2.9 2.7 2.3 5.0 15.090 7.3 
Center for Economic Forecasting of 
Mexico 3.0 3.5 3.0 6.9 4.3 3.9 3.4 13.610 6.3 
UACJ 1.5 1.5 1.0 4.5 5.0 4.0 6.0 13.500 8.0 
ITESM 1.0 2.0 3.0 4.0 10.0 5.0 4.0 14.000 7.0 
COLEF 1.1 1.0 6.0 -2.0 2.5 -2.0 6.0 14.500 8.5 
UAdeC 1.0 1.2 0.5 1.9 2.0 2.9 5.5 13.800 8.0 
          
Consensus -- this quarter 1.7 1.8 2.4 4.1 4.1 3.4 4.5 13.980 7.1 
                   -- last quarter n/a n/a n/a n/a n/a n/a n/a n/a n/a 
          
          
         Annual Averages 
Historical Data 
GDP 
(2003 
Pesos, 
billions) 
Private 
Consumption 
(2003 Pesos, 
billions) 
Government 
Consumption 
(2003 Pesos, 
billions) 
Total 
Investment 
(2003 Pesos, 
billions) 
Exports 
(2003 
Pesos, 
billions) 
Imports 
(2003 
Pesos, 
billions) 
CPI 
June 
2002 = 
100  
Nominal 
Exchange 
Rate 
Pesos/ 
Dollars 
CETES 
28 Day 
2008 8,928.6 6,220.0 930.5 2,050.6 2,710.2 3,057.6 129.2 11.14 7.68 
Percent Change 1.35% 1.54% 0.59% 4.94% 1.40% 4.29% 5.13% 1.92%  
2007 8,809.9 6,125.5 925.0 1,954.0 2,672.9 2,931.7 122.9 10.93 7.19 
Percent Change 3.33% 3.86% 2.14% 7.17% 5.66% 7.00% 3.97% 0.28%  
2006 8,526.0 5,897.8 905.6 1,823.3 2,529.7 2,740.0 118.2 10.90 7.19 
Percent Change 5.13% 5.68% 1.72% 9.78% 10.94% 12.57% 3.63% -0.16%  
2005 8,110.2 5,580.7 890.3 1,660.8 2,280.3 2,434.0 114.1 10.92 9.20 
Percent Change 3.21% 4.78% 2.44% 7.46% 6.75% 8.48% 3.99% -3.29%  
2004 7,857.7 5,326.0 869.1 1,545.5 2,136.1 2,243.8 109.7 11.29 6.82 
Percent Change 4.00% 5.62% -2.76% 8.01% 11.50% 10.74% 4.69% 4.63%  
2003 7,555.8 5,042.8 893.8 1,430.9 1,915.8 2,026.2 104.8 10.79 6.23 
Percent Change 1.35% 2.22% 0.80% 0.37% 2.70% 0.70% 4.55% 12.05%  
2002 7,455.0 4,933.1 886.7 1,425.6 1,865.5 2,012.2 100.2 9.63 7.09 
Percent Change 0.83% 1.59% -0.33% -0.64% 1.44% 1.46% 5.03% 3.10%  
2001 7,393.9 4,856.1 889.6 1,434.8 1,839.0 1,983.2 95.42 9.34 11.31 
Percent Change -0.16% 2.48% -1.98% -5.64% -3.60% -1.63% 6.36% -1.27%  
2000 7,405.5 4,738.7 907.6 1,520.5 1,907.6 2,016.1 89.71 9.46 15.24 
Percent Change 6.60% 8.18% 2.38% 11.36% 16.28% 21.47% 9.50% -1.05%  
1999 6,946.9 4,380.3 886.5 1,365.4 1,640.5 1,659.7 81.93 9.56 21.41 
          
Note: 2008 Data are preliminary and subject to revision        
*GDP: Producto Interno Bruto, INEGI, 2003 Pesos         
*Private Consumption: Consumo Privado, INEGI, 2003 Pesos        
*Government Consumption: Consumo de Gobierno, INEGI, 2003 Pesos       
*Total Investment: Formación Bruta de Capital Fijo, INEGI, 2003 Pesos       
*Exports: Exportación de Bienes y Servicios, INEGI, 2003 Pesos        
*Imports: Importación de Bienes y Servicios, INEGI, 2003 Pesos        
*CPI, Banco de México, Annual Average, Base = June 2002        
*Exchange Rate, Banco de México, Peso-to-Dollar, Fecha de Liquidación, Annual Average      
*CETES 28 Days, Banco de México, Annual Average         
 
  
 
 
 
University of Texas at El Paso 
Diana Natalicio, President 
Richard Jarvis, Provost 
Roberto Osegueda, Vice Provost 
 
 
UTEP College of Business Administration 
Robert Nachtmann, Dean 
Pat Eason, Associate Dean 
Steve Johnson, Associate Dean 
Tim Roth, Templeton Professor of Banking & Economics 
Border Economics & Trade 
 
 
UTEP Border Region Modeling Project Corporate and Institutional Sponsors: 
El Paso Electric Company 
Hunt Communities 
Hunt Building Company 
Las Palmas & Del Sol Healthcare 
JP Morgan Chase Bank of El Paso 
Universidad Autónoma de Ciudad Juárez 
UTEP College of Business Administration 
UTEP Department of Economics & Finance 
UACJ Instituto de Ciencias Sociales y Administración 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
México Consensus Economic Forecast, a quarterly publication of the Border Region Modeling Project, a research unit within the 
Department of Economics & Finance at the College of Business Administration of The University of Texas at El Paso, is available on 
the Web at: http://academics.utep.edu/border.  Econometric research assistance provided by Emmanuel Villalobos and Enedina 
Licerio.  For additional information, contact the Border Region Modeling Project - CBA 236, UTEP Department of Economics & 
Finance, 500 West University Avenue, El Paso, TX 79968-0543, USA. (915) 747-7775. 
 


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Follow the leader: Mexico hurt by U.S. slowdown

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