| | |  Business News | October 2008 
Weak Peso Keeps Mexico Shoppers Away From US Malls
 Robin Emmott - Reuters
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McAllen, Texas Mexicans, who normally spend $2 billion a year shopping in Texas, are staying home as the global financial crisis and a weak peso cut their purchasing power.
Heading to the plush malls of Texas cities like Houston, Laredo, McAllen and San Antonio is a way of life for Mexicans in big northern cities like Monterrey and other towns along the border.
Even some Mexican families as far from U.S. territory as Mexico City and Guadalajara make a once-a-year trip, drawn by cheaper prices and a far greater selection in the United States.
But since economic contagion from the U.S. slowdown and the ensuing global financial crisis hit Mexico, the peso has lost almost a quarter of its value after hitting a high of 9.8 pesos to the dollar Aug. 4. It fell to 13.8 pesos per dollar on Oct. 22.
While it does not compare to the collapse of the Mexican currency amid the Tequila Crisis, when the peso lost 40 percent of its value in a single week in December 1994, Mexicans today are still getting fewer dollars for their money.
We've really noticed the Mexicans stopped coming since late August and it's hurting our sales. We used to double our (sales) targets, but not anymore, said shop assistant Miranda Stromley at a half-empty outlet mall near McAllen.
Fewer Mexican vehicles are crossing the Rio Grande, U.S. Customs and Border Protection says. Hotel occupancy rates are down and Mexican car plates, usually outnumbering those from Texas on weekends in McAllen, are few and far between.
We can't go the United States to buy Christmas toys this year, the dollar is very expensive, said Mexican housewife Esthela Martinez while shopping for toys in Monterrey.
The lack of shoppers is a blow to the so-far resilient Texas economy, even as the United States' economy contracts.
Texas exports to Mexico were $47 billion in 2005, making Texas the largest exporter U.S. state to Mexico, according to a study by the Federal Reserve Bank of Dallas..
Mexico is the United States' third-largest trading partner after Canada and China.
MERRY CHRISTMAS?
Mexican shoppers, many of whom have family in the United States, make up half of all retail sales in Laredo and more than a third in McAllen, according to the bank.
Economic growth in Laredo could drop to 1 percent this year versus 3.5 percent in 2007, the bank said.
There is quite a bit of concern because we are approaching the Christmas season and that is the most important time here on the border, said Laredo Chamber of Commerce President Miguel Conchas. As long as the peso doesn't stabilize, uncertainty reigns and we worry people won't travel.
A stable peso has been crucial to the growth of the Mexico-Texas border region's economy since the North American Free Trade Agreement took effect Jan. 1 1994, more than tripling total U.S.-Mexican trade to $347 billion in 2007.
Hundreds of foreign companies have set up factories along the border to benefit from lower wages in Mexico, exporting to the U.S. market and in turn raising Mexican household income and helping U.S. retail sales.
The Texan retail sector is like an export industry, more like manufacturing, and a fall in sales can bring down retail jobs, said Keith Phillips, senior economist at the Federal Reserve Bank of Dallas.
(Additional reporting by Gabriela Lopez, editing by Philip Barbara) |
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