Recession in Mexico

A Different Type of Recession is an article from the Economist, it talks about how the global recession has affected Mexico and what this will mean for Mexico’s future.

Mexico's market economy is still heavily under development. Mexico has both a developing industrial market in the north, and a largely agricultural economy in the south. Globalization has helped Mexico industrialize and grow. NAFTA, the North American free trade agreement, shows how globalization has connected Mexico economically with the United States.
This recent recession is taking longer for Mexico to overcome than the crash Mexico saw in 1995. This time the United States can’t help bail Mexico out and Mexico’s industries are suffering. Mexico City and other major cities in Mexico have not been affected as badly as the smaller manufacturing and industrial cities have. Because the United States' consumption of goods from northern Mexico's industrial plants has slowed down so much, the manufacturing cities and labor jobs have been hit hard. NAFTA has made Mexico dependent on the United States, the manufacturing plants and investments by the U.S. has become a crutch for Mexico that has suddenly become too short.

But the daily life of businesses and people in the hustle and bustle of major cities has been relatively unaffected because of the lack of inflation. Government subsidies also saved many workers from becoming unemployed and some people are able to dip into their retirement funds and savings accounts. Of course this does not mean that everyone living and working in the major cities have not seen tragedy. The poorer sections of major cities have seen much poverty, families have to sell property and farm animals to pay for food to eat.

The agricultural economy in Southern Mexico, the poorest part of the country has not seen much change during this recession. The farmers are still able to farm, and didn’t have too many economic ties with the industrial cities who are crashing the most. Thankfully, the regular agricultural exports are still running as usual.

Swine Flu also affected the economy, making the crash that much harder to bear. The lack of tourists to pump money into the coastal cities, and the shut down of Mexico City for a week weakened the economy enough for the global recession to hurt that much more. Mexico’s oil industry is buckling under as well. The government used to not have to tax heavily because of the inflow of money from oil profits, but now, higher taxes are going to have to be placed on the already stressed incomes of Mexicans.