You can really smell that Mexico is in economic trouble, whether it be from the smallest interactions of daily life or the macroeconomic data that are usually presented by governmental firms.
Just yesterday, the Mexican Treasury Department, the economy of Mexico has shrunk by 6.8 year for the full year of 2009. This is the Mexican economy's poorest showing in the last 30 years, outpacing even the 6.2 contraction experienced during the 1995 debt crisis.
If it's any consolation, the last quarter of 2009 saw an economic expansion of 1.2 percent from the third quarter, though this is still 3 percent lower than the economic output during the same period in 2008. During the third quarter, the economy expanded by 2.9 percent up from the second quarter, which had a very steep decline of 10.3 percent. Overall, the decline of the economy was a bit better than what had been predicted, put at negative 7 percent economic growth.
Of course, economic contraction is not without its casualties. It is estimated by the national government that some 180,000 jobs were slashed from the labor sector because of the businesses closing down. If there are any people most affected by the country's economic crisis, it is those people at the bottom of the social ladder, for they have lost the jobs that are the only sources of their income. At least those at the top only lose businesses, but they almost always have some sort of emergency funds that they can tap in the meantime. Today, most of Mexico's hundred-million strong population is working for the informal sector.
With the United States as its neighbor and biggest trading partner, it is already expected that Mexico will have this kind of contraction, thought it is surprisingly steeper than the contraction that the United States has experienced. Nevertheless, both countries are already on the path towards growth. Expect modest growth to be there in the coming quarters.
