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A close look at the economy.

On the second day of the National Convention 2005, AMCHAM members had the chance to listen to two of Mexico's top economic functionaries: Central Bank Governor Guillermo Ortiz and Secretary of the Economy Sergio Garcia de Alba.

According to Ortiz, the Mexican economy has had a "to put it sweetly, mediocre" growth of three percent due to a combination of macroeconomic circumstances and a favorable external environment. The administrator said that considering such historic circumstances, which have not been seen since the sixties, this growth is "ridiculous" and "insufficient."

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The governor of BANXICO considered Mexico to have a historic opportunity to have achieved a considerable degree of economic stability, and now the theme for the next presidential elections will be the potential growth of the economy. "I'm not worried at all about the outlook for next year," he clarified. "I don't anticipate any surprises regarding the elections."

Ortiz asserted that before the next electoral process, "we do not have to discover tepid water, because we already have a diagnosis and we know that we have to do structural reforms, like energy, tax and labor reforms," he added. "Now, it is just having the political will and ability to put it into practice."

The functionary said the peso may weaken as the nation reduces interest rates when U.S. yields are rising. "That should reduce the incentive to speculate in favor of the peso and the exchange rate may reach more normal levels."

Ortiz reiterated that inflation will finish the year at about 3.5 percent, within the target range of two percent to four percent.

For his part, Garcia de Alba indicated that Mexico and the United States should work in a coordinated way to combat contraband goods, because a great quantity of Chinese products head to the U.S. and then, with false certificates of origin, head south of the border where they are sold as American goods.

He said that the Mexican automobile industry and auto distributors could take the initiative to legalize "chocolate" cars as an opportunity, and negotiate in blocks the import of cars to sell them in Mexico and also offer the service of autopart and renovation sales.

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--L.S.S.

Photographs: Eduardo Gomez
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Article Details
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Title Annotation:AMCHAM AT WORK; peso increases
Author:Samper, Laura Suarez
Publication:Business Mexico
Geographic Code:1MEX
Date:Dec 1, 2005
Words:403
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