Growth Slows In Mexico, Hitting 5.1% --- As Exports Ease, Economists See Risk In Strong Spending
MEXICO CITY -- Mexico's highflying economy lost altitude quickly during last year's fourth quarter, with output here growing a modest 5.1% amid weaker growth in the U.S. Economists had expected a result closer to 6%.</br></br>Despite the late slowdown, figures released yesterday showed Mexico's economy easily beat the government's 4.5% target to grow 6.9% for the year as a whole, its fastest annual growth since 1981. The economy was helped by oil prices at a decade-high, a growing U.S. appetite for Mexican exports, and spending by Mexican consumers who enjoyed wage gains greater than price increases.</br></br>This year's outlook under new President Vicente Fox Quesada is more uncertain, thanks to a recent drop in oil prices and a fast-slowing U.S. economy, where roughly 85% of Mexican exports are sold. Industrial output for December, the latest barometer of activity, slipped slightly after double-digit growth for much of the year.</br></br>Some economists welcome a slowdown as a way to prevent prices from rising too quickly. But they note that the drop in industrial output doesn't necessarily mean that Mexicans are spending less. If spending on imports remains strong while Mexican factories export less, they note, the trade deficit could widen, weakening the currency.</br></br>"A slowdown for Mexico is inevitable," said economist Gray Newman at Morgan Stanley Dean Witter. "The risk is that production slows substantially and spending does not."