MercoPress. South Atlantic News Agency

Solid performance and prospects for Mexican economy

BBVA Bancomer, one of Mexico's biggest financial institutions, forecasted that the country's economy will grow 4.3% in 2006, its best performance since 2000.

The report points out to the strong performance of the export sector, automobiles and the non oil sector, during the first half of this year with a 17.9% expansion. This was has been accompanied by "a solid performance in domestic demand" with a 6.5% increase in consumption and 10.8% in business investment.

The BBVA report adds that in the last 12 months the Mexican economy created 830,000 new jobs, "the largest number since 1997" achieved through a combination of positive factors: low inflation and interest rates; high oil prices; large remittance and credit inflows, as well as a gradual rise in consumer demand at home and an encouraging business climate. GDP estimates for 2007 in Mexico is 3.4%.

Prudent management of surpluses from high oil prices have had a favourable impact on economic growth with greater public spending combined with a budget surplus of 0.2%, "the best result since 1993".

The report predicts inflation will reach 3.4% in 2006, a figure within the Central Bank's inflation goals. However the main inflationary risks come from United States inflation which could spill over to Mexico and raw materials prices evolving less favourably than expected.