ABOUT US  |  INDUSTRY PRACTICES  |  SERVICES  |  PRESS ROOM

It is all too common for Latin American politicians to live in rosy denial of their nation’s economic plight. Latin voters, long accustomed to incompetent or unscrupulous government, can be surprisingly optimistic, even when facing dire circumstances. Perhaps it is a sign of political maturity that today, Mexicans –politicians and voters alike – are decidedly gloomy in the midst of a period of economic stability unknown to the country since the 1960s.

As Americans emerge from their period of national grieving following unprecedented terrorist atrocities on their own soil, there is growing concern about the economic fallout: a weakened economy, further stock market losses, and rising unemployment. Bad news in the US is a chilling prospect for emerging markets. In particular, Latin American economies are increasingly tied to their northern neighbor. George Bush, who had shown great interest in Latin America, is now preoccupied with fighting international terrorism, an enormous and long-term task. Latin America, for the time being, has fallen off the US political map.

Ecuador's currency lost nearly two-thirds of its value relative to the US dollar in 1999. On January 9, 2000, the government responded by dollarizing the economy. It was a good time to stabilize the currency. The price of crude oil, Ecuador's leading export, stood at an eight-year high. As the world's largest exporter of bananas, the country also saw growing income as the price of that commodity rose three years in a row. With rising fiscal income and a comfortable trade surplus amounting to 17% of GDP, even skeptics were encouraged by the good fortune smiling on Ecuador.

..Mexico Economic & Political Forecast

This famous quotation from former President Porfirio Diaz comes to mind when contemplating the fallout of the September 11 attacks on Mexico. There will be detrimental impacts both on the nation's economy and on its global political standing. In economic terms, Mexico will continue to follow the American decline, since it is dependent on the US for nearly 90% of its export sales. Politically, Mexico slid from its status as a privileged geopolitical partner to a 2nd or 3rd tier power in the halls of Washington, all in a matter of weeks. Mexico began 2001 with a highly optimistic outlook. The year will end with negative growth, a weakened forecast for 2002, and diminished influence in the global community.

Mexico's economy is split between domestic and export sectors that are relatively independent of each other. These two economies each depend for their strength on a different set of factors.