Worries about Mexico’s economy

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Mexican officials are growing pessimistic about the fortunes of the nation’s economy this year and are hustling to revise their forecasts. This week, the central bank predicted that Mexico’s gross domestic product will expand between 3% and 3.5% in 2007. Three months ago they were forecasting growth as high as 3.75%

Mexico’s Treasury Secretariat likewise downgraded its GDP forecast to 3.3% from 3.6%. Some private-sector analysts are predicting expansion under 3%.

The reason: slower growth in the United States, Mexico’s largest trading partner and the source for 80% of its exports. Mexican auto production was down 12.4% in the first quarter compared to the same period last year due to slumping domestic sales and lower shipments to American showrooms.

Mexico also is getting hammered by the U.S. housing slowdown. One in five Mexicans working in the U.S. is believed to be employed in the construction industry. The growth in the remittances they and other workers send to relatives back home in Mexico has slowed dramatically, another drag on the economy.

Posted by Marla Dickerson in Mexico City