| | |  News Around the Republic of Mexico | February 2009 
Calderon Says Mexico May Need More Measures to Spark Economy
 Juan Pablo Spinetto & Joshua Goodman - Bloomberg
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| Presidency clarifies President Calderón’s participation in session on “Latin America’s Economic Imperative” held in Davos yesterday.
The World Economic Forum interpreter made a series of mistakes in her interpretation of the Mexican President’s remarks.
In particular, she inaccurately translated the segment in which President Calderón said quite clearly:
"Bueno, me siento muy cómodo, debo decir. Realmente es... bueno, alguien dice que cuando tú estás en la oposición, tú estás en el cielo, cuando tú estás en el gobierno, tú estás en la tierra, en el suelo”.
(“Well, I must say I feel very comfortable. The thing is that when you are in the opposition, you are in heaven, and when you are in government, you are on earth, on the ground.")
At no point did he mention the word "hell" in this sentence, as translated by the interpreter in her simultaneous interpretation. | |
Mexican President Felipe Calderon said the government may need to take additional steps to stimulate an economy he said is likely to contract this year.
Measures being considered wouldn’t lead to a perennial budget deficit, which could jeopardize investor confidence in Latin America’s second-largest economy, he said. He didn’t elaborate on possible new stimulus measures, except to say they won’t include tax cuts.
“I prefer to wait to see the final size of the problem we are facing” before making an announcement, Calderon said in a Bloomberg Television interview from Davos, Switzerland. “We need an exit strategy from these anti-cyclical policies so we don’t keep generating a deficit that could be dangerous.”
Mexico is being pulled into the global slump in part because it depends on the U.S. to buy 80 percent of its exports, though it has weathered the crisis better than its northern neighbor. Calderon today said gross domestic product may shrink this year, without providing an estimate.
The $892 billion economy probably contracted 1 percent in the fourth quarter of last year, according to the finance ministry. It may shrink between 0.8 percent and 1.8 percent in 2009 and lose as many as 340,000 jobs, the central bank said Jan. 27.
The stumbling economy and slowing inflation give the central bank room to continue lowering rates that remain “very high,” Calderon said. He declined to speculate on the right interest rate and commended the bank on its “active” policy.
Rate Cuts
The central bank cut its benchmark rate for the first time in almost three years in January, by a half-percentage point to 7.75 percent. The bank will reduce the rate by another half point next month, according to the median estimate of economists surveyed Jan. 20 by Citigroup Inc.’s Banamex unit.
Calderon this month announced a plan to increase infrastructure spending, raise unemployment benefits and lower energy costs. The plan, along with moves last year that include building the first refinery in almost 30 years, are worth 1.8 percent of gross domestic product. Mexico also freed a similar amount in credit for small and medium-sized business, he said.
A weaker peso is also boosting the competitiveness of Mexico’s exports, hurt by their dependence on the U.S. The peso has fallen 28 percent since September, more than all of the 16 most-actively traded currencies tracked by Bloomberg except the Brazilian real.
Oil Production
Calderon, 46, who was energy minister under former President Vicente Fox, said oil output is stabilizing after state-owned Petroleos Mexicanos last year reported its biggest production drop since 1942. A law approved in October allowing the company to contract foreign producers was already generating interest in the sector, though Calderon wouldn’t say what private investments were in the works.
Efforts to shore up public finances will yield $10 billion in savings this year, helping the government overcome declining oil revenue as crude prices fall, he said.
“Obviously this is something I’m very worried about,” he said. “I estimate that we will resume growing output in two years.”
Calderon said he was concerned about protectionist pressures in the U.S. He has repeatedly warned against trying to renegotiate the North American Free Trade Agreement, saying that restricting commerce would hurt both the U.S. and Mexican economies and encourage illegal Mexican immigration to the U.S.
Mexico is the third-largest U.S. trading partner, with the two countries exchanging about $347 billion in goods last year.
Calderon said the economic stimulus plan working its way through the U.S. Congress also contained protectionist elements, such as requiring U.S.-made iron and steel in infrastructure projects. For now, though, it was important to get a plan passed so the U.S. economy could get back on track.
“The U.S. is in a delicate situation and I really hope their plan works,” he said.
To contact the reporters on this story: Juan Pablo Spinetto in Davos, Switzerland, at jspinetto(at)bloomberg.net; Joshua Goodman in Rio de Janeiro jgoodman19(at)bloomberg.net. |
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