Calderon Says Mexico May Need More Measures to Spark Economy
Mexican President Felipe Calderon said the government may need to take additional steps to stimulate an economy he said is likely to contract this year, Bloomberg reported.
Measures being considered wouldn't lead to a perennial budget deficit, which could jeopardize investor confidence in Latin America's second-largest economy, he said. He didn't elaborate on possible new stimulus measures, except to say they won't include tax cuts.
"I prefer to wait to see the final size of the problem we are facing" before making an announcement, Calderon said in a Bloomberg Television interview from Davos, Switzerland. "We need an exit strategy from these anti-cyclical policies so we don't keep generating a deficit that could be dangerous."
Mexico is being pulled into the global slump in part because it depends on the U.S. to buy 80 percent of its exports, though it has weathered the crisis better than its northern neighbor. Calderon today said gross domestic product may shrink this year, without providing an estimate.
The $892 billion economy probably contracted 1 percent in the fourth quarter of last year, according to the finance ministry. It may shrink between 0.8 percent and 1.8 percent in 2009 and lose as many as 340,000 jobs, the central bank said Jan. 27.
The stumbling economy and slowing inflation give the central bank room to continue lowering rates that remain "very high," Calderon said. He declined to speculate on the right interest rate and commended the bank on its "active" policy.