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 Business News | May 2008 
Mexican Govt Says Consumer Spending Still Strong
 Noel Randewich - Reuters
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Mexico City - Consumer spending in Mexico is supporting the economy in the face of a U.S. slowdown, a senior government official said on Thursday, despite data showing a recent decline in retail sales.
Consumer spending, fueled by an unprecedented availability of credit cards and other kinds of loans, is expected to help keep Mexico's economy growing this year as the industrial export sector takes a hit from lower U.S. demand.
"What we see in data from the first quarter and in preliminary retail sales figures is that consumer spending continues to show adequate dynamism," Deputy Finance Minister Alejandro Werner said at a mortgage industry event.
Banamex brokerage said in a report on Thursday it expects dominant retailer Wal-Mart de Mexico (WALMEXV.MX: Quote, Profile, Research) to post a 2.5 percent rise in same-store sales, discounting inflation, in May over the year-ago period.
"We still see no signs of an unfavorable impact from weakness in the United States," wrote Banamex analyst Eduardo Estrada.
Mexican retail sales unexpectedly fell in March, down 0.5 percent from a year earlier.
In April, sales of Mexican retailers group ANTAD, which include's Wal-Mart de Mexico, slipped 3.4 percent compared with the year-ago period.
Consumer credit was only in a nascent stage in Mexico when its economy was dragged down by the last U.S. recession at the beginning of the decade. Now lending is growing steadily and is expected to help offset a drop in U.S. demand for Mexico's exports.
"Unlike in other (downward) economic cycles, there is credit," central bank chief economist Manuel Ramos said at the event. "With credit, households can maintain much more consumer spending."
Mexican bank lending to individuals and companies increased 21.1 percent in March over the year-ago period.
The government sees Mexico's economy, which sends about 80 percent of its exports to the United States, growing 2.8 percent this year.
(Editing by Leslie Adler) |
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