The Mexican government took emergency measures to bolster economy as the country is suffering from growing impacts of a global economic turmoil.

The global economic crisis is spreading into Mexico which has been tied closely to the United States, poisoning its export, financial market, foreign investment as well as many of its pillar industries, and pushing the country to the brink of a recession.

Mexican President Felipe Calderon launched an anti-crisis program in January to protect his country from the downturn and the economy is expected to pick up in the second half of 2009.

ON THE BRINK OF RECESSION

According to the latest statistics released by Mexico's Central Bank, the country registered an economic growth of 1.5 percent last year, lower than the predicted 2 percent, with the figure for the last quarter of 2008 sliding to a negative 1 percent.

Furthermore, the prospect for country's economy remains gloomy, and a zero or negative growth is expected for this year. The Central Bank had earlier lowered its prediction from between 0.5 percent to 1.5 percent to between negative 1.8 percent to negative0.8 percent, indicating the country is edging closer to recession.

Meanwhile, President Calderon said the country will be experiencing times of huge difficulties in terms of economic growth, investment and employment.

Mexico's unemployment rate reached 5 percent in January, the highest in more than 12 years, and as many as 340,000 employees are expected to lose their jobs by the end of this year, far more than the January prediction of 201,000.

The Mexican peso has tumbled 32 percent against U.S. dollars since last August, making it the worst performer of the world's most-traded currencies.

What's more, foreign capital flows to Mexico is likely to plummet to 15.113 billion dollars this year from 18.5893 billion dollars in 2008 when global economic downturn was unfolding.

MEXICO'S STRUGGLING INDUSTRIES

Many of Mexico's export-dependent industries are struggling with economic woes amid shrinking demand in world markets.

The auto sector, one of Mexico's pillar industries, suffered a 2.1 percent loss in output and 7.7 percent decrease in export last November.

As about 75 percent of the cars foreign automakers produce in Mexico are for export, and the auto industry accounts for 17 percent of the total output value of Mexico's manufacturing industry and 3.5 percent of its GDP, the slashing auto output dealt a heavy blow to the country's export.

Foreign remittances, which had been second only to oil revenue in the share of national income, plummeted to 25.145 billion dollars in 2008, or a 3.6 percent decline from the previous year, and the first negative growth in eight years, said the Central Bank.

The Bank attributed the sharp decline in remittances to massive layoffs among Mexican migrant workers in the United States in the heavily affected industries such as construction and processing. Economists predicted that remittances are unlikely to pick up any time soon in view of the sagging U.S. economy.

Mexican cement giant Cemex SAB, the world's third largest cement producer, lost 92 percent of its full-year profit in 2008 compared with the previous year, because of declining exports, the sagging value of the peso, a shrinking housing market, as well as the credit crunch.

GOVERNMENT'S STIMULUS PACKAGE

To stimulate economy, the Mexican government forged with business and union associations a stimulus plan worth 54 billion dollars in January that includes a freeze on gasoline and natural gas prices in 2009, housing aid, unemployment insurance and more construction.

A total of 800,000 houses will be built or remodeled in 2009, which will generate as many as 2.5 million temporary jobs, according to the government.

President Calderon also pledged some 550 million dollars to poverty-stricken families to improve their livelihoods and nearly 150 million dollars to ailing industries, especially export-dependent companies, to save hundreds of thousands of jobs.

Furthermore, to stop a sharp depreciation of the battered peso, which has fallen to record lows, losing 32 percent against the dollar since last August, the Central Bank decided to start auctioning off 100 million dollars a day on March 9.

The state-owned oil giant Pemex has also announced recently that it will invest 19.4 billion dollars in exploration and production as part of a plan to boost the company's daily output to 3 million barrels by 2015.

Some experts said that it takes time for Mexico's economy to recover as it is so closely tied to U.S. economy. But there is the possibility that it will pick up in the second half of 2009 if the stimulus measures taken by world's economic powers and the Mexican government itself work out.

Source: Xinhua