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Mexico economy still strong: cenbank

Tue Apr 1, 2008 3:39pm EDT

Reporter's Notebook

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By Noel Randewich and Alistair Bell

MEXICO CITY (Reuters) - Mexico's economy has yet to suffer a significant slowdown despite a feared recession in the United States, as industrial output and investment stay fairly healthy, the central bank governor said on Monday.

Experts warn that a drop in the U.S. economy will hurt Mexico more than others in Latin America, but Gov. Guillermo Ortiz, at the Reuters Latin America Investment Summit in Mexico City, said recent data suggested Mexico is in relatively good shape.

"So far this year, we haven't really felt an important slowdown in Mexican economic indicators," he said.

"Figures for consumption, as well as investment, industrial production and foreign trade point to a first quarter with relatively strong activity," Ortiz said, although he predicted the period would be slower than it was a year ago.

Easter, a major Mexican holiday, fell this year in the first quarter, which will add to the slight cut in economic growth compared to the same period in 2007, when the week was in April, Ortiz said.

The central bank is under pressure to cut interest rates to shore up economic growth, seen taking a hit this year from lower demand from the United States, Mexico's main trading partner.

Many investors in Mexico have bet that the central bank will make two interest cuts in the second half of this year, but a recent inflation spurt gives the bank a bit less room to maneuver.

Ortiz, who has been the Bank of Mexico's governor for over a decade, gave few clues to the direction of monetary policy.  Continued...

 
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