MEXICO'S ECONOMY STAGNATES.Economic stagnation in Mexico is putting a dent in consumer confidence and will likely have a negative impact on spending into the first half of 2002. A recent monthly survey of economists released by the Central Bank of Mexico The Bank of Mexico (Spanish: Banco de México), abbreviated BdeM or Banxico, is Mexico's central bank and lender of last resort. Banco de México is autonomous in exercising its functions. (August 2001) projected that Mexico's economy would grow a meager mea·ger also mea·gre
1. Deficient in quantity, fullness, or extent; scanty.
2. Deficient in richness, fertility, or vigor; feeble: the meager soil of an eroded plain.
3. 0.77 percent this year. This contrasts with January's survey results that projected economic expansion would be 3.83 percent in 2001.
A recent Reuters article said that the head of Mexico's central bank, Guillermo Ortiz, believed Mexico's economy-Latin America's second biggest-would grow less than one percent in 2001. The reduced projection is attributed to fallout from the slowdown in sales to Mexico's top trading partner- the United States. More than 80 percent of Mexican exports are destined des·tine
tr.v. des·tined, des·tin·ing, des·tines
1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic.
2. for the US market. Ortiz, speaking at a conference in New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , said, "It (GDP GDP (guanosine diphosphate): see guanine. expansion) will probably be below one percent, something close to what the analysts are predicting." Mexico's economy grew in the first quarter 2001 by 1.9 percent on a year-on-year basis and stayed flat in the second quarter as exporters and builders saw their output shrink.
The reduction in economic activity comes as a substantial setback to President Fox, who had projected that economic activity would be adequate to prevent a setback in consumer confidence. The Mexican government had initially forecast growth of 4.5 percent for the year, but lowered its estimates on several occasions before the economy reached the point of stagnation Stagnation
A period of little or no growth in the economy. Economic growth of less than 2-3% is considered stagnation. Sometimes used to describe low trading volume or inactive trading in securities.
A good example of stagnation was the U.S. economy in the 1970s. during the third quarter. In August the president conceded that economic expansion would be under 2 percent for 2001, well below the level of 6.9 percent in 2000.
Ortiz also predicted that by the end of 2001 Mexico's legislature would pass a tax reform package aimed at reducing the country's reliance on oil revenues. "My impression from meetings I've had is that the fiscal reform will pass, but not in the form in which it was originally sent to Congress. It will be a diluted version, but one that should yield more than 1 percent of gross domestic product," he said. The tax reform package involves levying a value added tax value added tax n (BRIT) → impuesto sobre el valor añadido or agregado (LAM)
value added tax n (Brit on consumer goods which were formerly exempt, and it is difficult to predict to what degree that will negatively impact sales of those goods.