Mexico’s Economic Growth Exceeds Forecasts

Mexico’s economy grew at its fastest pace in 16 years in 1997, the government said Monday, but economists warned that the rapid growth that followed the 1994 peso crisis would probably not continue.

Gross domestic product grew 7% last year, the Finance Ministry said, well above 1996 growth of 5.1% and a figure most analysts dared not even dream of a year ago.

“Compared with our expectations of a year ago, this is extremely impressive,” said independent economic consultant Jonathan Heath.

This time last year, economists were forecasting the Mexican economy would grow 4.5% to 5% in 1997.

Although strong growth during the year caused analysts to raise their forecasts, they still said they were impressed with an economy that grew despite banking sector weakness and a credit squeeze on all but Mexico’s biggest companies.

“The larger firms could get credit from abroad, but the small and medium enterprises got no credit at all,” said Heath. “Somehow they’ve managed to recover.”