Mexico’s Economy Grows at 4.5% Rate

Mexico’s economy expanded by 4.5% in the fourth quarter, the government reported Friday, as the nation was helped by robust consumer spending, high oil prices, a rebounding factory sector and record remittances received from abroad.

The strong showing -- the fastest quarterly growth pace in four years -- boosted Mexico’s full-year 2004 gross domestic product growth to 4%, according to a report released by Mexico’s Ministry of Finance and Public Credit. That’s up from 1.3% growth in 2003, and is the best annual showing for the Mexican economy since the height of the technology boom in 2000, when Mexican GDP surged by 6.9%.

Mexico’s export-oriented maquiladora factories -- foreign-owned plants located mainly in northern Mexico -- rebounded strongly in 2004 as the U.S. economy strengthened. November export factory shipments were up 24% from the same month a year ago, while the maquiladora plants added more than 84,000 jobs in the first 10 months of the year after three straight years of losses.

High oil prices also helped Mexico’s export sector as the state oil monopoly posted record sales last year.

Mexico’s consumers also did their part. Retail sales have been growing at a healthy clip, as have sales of big-ticket items. Mexican consumers last year purchased a record 1.1 million cars and trucks, putting Mexico on pace to surpass Canada in vehicle sales by the end of the decade.

Analysts point to easier availability of consumer credit, as banks have aggressively pushed credit cards and auto loans. But remittances also have played a role. According to statistics from the Bank of Mexico, Mexicans living outside the country sent a record $16.6 billion home last year, up 24% from 2003.

Remittances have overtaken tourism as the nation’s second-largest source of inflows, behind petroleum. By some estimates, as many as one in five Mexicans is receiving money from someone abroad, with virtually all of those funds coming from the U.S.

“It’s a big component of consumption in Mexico,” said Pedro Tuesta, a senior Latin America economist at 4Cast Inc. in Washington. “A lot of housing in Mexico gets built that way.”