lunes, 12 de septiembre de 2011

Fasten your seat belts...

Fasten your seat belts...

The European crisis is snowballing. If the question were just whether European governments can act in time to prevent a full-fledged run on Italy and Spain, it would be be bad enough. That the Europeans don't agree on what needs to be done to prevent a re-run of the post-Lehman crisis makes these days much more frightening. An already ugly situation is getting uglier by the day.

Mexico is feeling the fallout. At the beginning of August, the fix rate was a peso lower than it was today, Monday, September 12. The IPC (Mexican stock index) has dropped 2,000 points. Expectations about interest rates have changed dramatically: if the Banco de Mexico moves the Mexican reference rate before the end of next year, odds are that it will lower it, not raise it. 

It's not just the financial markets that have been hit. With US growth projections being cut, Mexico's projected growth rate has been reduced. Growth should still receive a boost next year from the presidential election but it won't be enough to counteract the dampening effect coming from the US.

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