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Field trip to Mexico City (03.10): Uphill for a while

Mexico is recovering from a hard punch in 2009: A drop of 9 % in GDP. In February 2009 Carlos Slim had thrown a stone in the pool when he suggested in the media that the country should brace for a tough recession. An uproar had followed amongst economists and politicians. He was right.
The country grew by 4.3 % in the first quarter of 2010. That is giving a breather to President Felipe Calderon. But sustainable growth faces three main challenges:
1. Constitutional reforms: Pemex and the energy sector are bankrolling the state. And this vital sector is protected by the constitution.
2. Business reform: The Mexican economy is notoriously known for its oligopolies in several key sectors.
3 Security reform: The drug war has escalated. And so have the indirect costs: a drop in foreign direct investments and tourists as well.
Quite interestingly support remains high for President Calderon, who has moved into the second half of his ‘sexenio’. Now how far can he progress in these three areas of changes?
In the 10 years following the crisis of 1994, Mexico proved to the international community that it could reestablish a stable and steady management of its economy. The Central Bank and the Hacienda are now the hawkish guardians of that hard-earned credibility. Yet progress has been slow on other fronts in this first decade of the 21st century.
It will probably take much of the best goodwill of President Calderon and that of his successor to put Mexico back on a sure footing as a top tier emerging economy.
That is about ten years. Mexico will muddle along while others, like Brazil and China will be racing ahead.
André Du Sault.

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