Down South, Mexico's Economy Goes South

Down South, Mexico's Economy Goes South

NewsMax.com Wires
Tuesday, Aug. 21, 2001

Mexico is mired in a deep recession so bad that an estimated half-million Mexicans have been thrown out of work since December.

Economists blame the recession on the faltering U.S. economy. They note that Mexico has been selling 80 to 90 percent of its exports to the United States since 1994 when the North American Free Trade Agreement (NAFTA) took effect in 1994. The loss of much of that income occasioned by the downturn in their northern neighbor's economy has meant countless shutdowns and layoffs in Mexico as companies shed workers to save money.

The recession is so bad that as many as 20 percent of all Mexicans are either without jobs or are working only part time and unable to get by.

"The correlation of manufacturing job losses in Mexico to the deceleration of the U.S. economy is about one to one," Alfredo Thorne, chief Latin American economist at J. P. Morgan Chase in Mexico City, told the New York Times.

According to the Times, nearly half of the population of Mexico is poor, and millions of people have less money and less food to eat than they did a year ago.

Especially hard hit are the scores of businesses along the U.S. border, to which more than a million Mexicans flocked over the last 10 years to find work in the factories set up to produce goods meant for the U.S. as a result of NAFTA.

This fact has raised the grim specter of hundreds of thousands of unemployed Mexicans seeking to cross the border legally or illegally to find work, economists warn.

Part of Mexico's problem lies in the fact that despite the depressed economy, the peso is strong.

Economists explain that a strong peso means Mexican exports cost more, making matters worse when the American economy sags. That alone has cost thousands of jobs at the assembly plants near the border.

Rogelio Ramírez del la O, one of Mexico's top economists, told the Times that "we have not hit bottom yet." President Vicente Fox's predicted 7 percent growth, he said, could end up approaching a mere 0.7 percent, if that, forcing many more Mexicans to live hand to mouth before a North American economic revival.

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