Mexico revises growth estimate to zero.

Seems there's a lot of 'revising' of economy prognostications having to be done lately - and revising to bad news, not better.  Dee 

This is from http://FT.com  Financial Times, Americas:

Mexico revises growth estimate to zero

By Adam Thomson in Mexico City

Published: March 9 2009 02:00 | Last updated: March 9 2009 02:00

Mexico sharply revised down its growth estimates for this year to zero in a frank admission yesterday that the US recession would hit the economy far more than official estimates had -suggested.

Agustín Carstens, the finance secretary, said: "We are facing very strong downward pressure on economic activity . . . We are expecting that our economy will not really grow at all."

Mr Carstens's estimate, which contrasts markedly with the previous estimate of 1.8 per cent growth, brings official forecasts more into line with those of the private sector. This week, for example, Standard & Poor's, the rating agency, said Mexico's economy would shrink by 0.5 per cent this year.

The government's recognition that Mexico's economy is set to suffer more than had previously been acknowledged comes a day after Felipe Calderón, Mexico's centre-right president, announced a series of measures to try to offset the worst effects of the fallout from the US.

The measures include freezing the price of petrol, reducing by 10 per cent the cost of liquid gas used in many households, and rolling out cheaper electricity prices to small and medium-sized companies.

Mr Calderón also announ-ced a scheme to allow Mexicans access to a greater portion of their pensions' savings, extending temporarily social security benefits for those who lose their jobs and spurring government spending, particularly on infrastructure projects, by making bureaucracy more agile.

Mexico's private sector applauded the measures but in general said they were insufficient to make a significant difference.

Mr Carstens said that, taken together, the 25 measures announced represented "an important boost" for the economy.

He said the combined effect would increase aggregate demand by 120bn pesos ($7.9bn, €6.2bn £5.6bn), equivalent to roughly 1 per cent of gross domestic product. Government sources confirmed that the combined measures would not increase the fiscal deficit target this year of 1.8 per cent of GDP.

In particular, Mr Carstens emphasised the importance of opening up the clogged bureaucratic arteries through which public funds have to pass before reaching their destination.

For example, he said that government spending in the first quarter of this year was likely to be 50 per cent greater than for the same period in 2008 simply by virtue of reducing bureaucracy.

In an interview yesterday with the Financial Times, Alejandro Werner, Mexico's finance undersecretary, said that the resulting effect would be considerable.

"Simply put, you get much more economic impact in a given year by spending your money on January 1 than you do by spending it on December 31," he said.

Copyright The Financial Times Limited 2009

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