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 Business News | October 2005 
Mexican Economic Growth Picks Up in Third Quarter
 Reuters
Mexico City - Mexico's economy grew a faster-than-expected 3.5 percent in the third quarter, compared with the year-ago period, as exports picked up and domestic demand stayed firm, the government said on Monday.
The finance ministry's preliminary gross domestic product estimate showed an uptick from the second quarter, but lost output and working days from hurricanes Katrina and other storms that hit Mexico in September have not been built into the third quarter estimate.
"It is necessary to warn that this forecast is subject to a considerable uncertainty because the impact of weather on the economy in September still cannot be calculated accurately," the ministry said in its quarterly financial report.
Hurricanes that hit Mexico in October are also likely to slow economic growth in the fourth quarter, economists say.
The Caribbean beach resort of Cancun and nearby beach spots popular with foreign tourists came to a standstill after hotels were wrecked by Hurricane Wilma this month. The tourism industry in the region is struggling to get back on its feet.
Mexico's GDP grew a weaker-than-expected 3.1 percent in the second quarter, compared with the year-earlier period, hurt by falling farm output and by soft U.S. auto industry demand which hit Mexico's car and truck plants.
In September, economists polled by Reuters had forecast growth for all of this year would come in at only 3.01 percent.
The finance ministry has forecast gross domestic product growth of 3.5 percent for 2005, while the central bank has a more cautious estimate of 3.0 percent.
After curbing inflation toward its 2005 target, Mexico's central bank began to allow interest rates to fall in August in order to stimulate the tepid economy.
Mexico's economy grew by 4.4 percent in 2004.
Economists say faster expansion is difficult due to increasing competition from China and a lack of progress so far on what they see as vital tax system reforms and an an overhaul of the energy industry to allow a flood of private investment.
The ministry also said on Monday that Mexico registered a budget surplus of 101.604 billion pesos for the first nine months of 2005 as sky-high global oil prices meant Mexico continued to enjoy bumper revenues from oil exports. |
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