Mexico Economic Stimulus Package

By: EconomyWatch   Date: 30 June 2010

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In January 2009, President Calderon, in order to prevent layoffs, has added $150 million in Mexican economic stimulus package. Mexican central bank has cut its lending rates from 8.25 percent to 7.75 percent. Inflation of 6.5 percent in 2008 is expected to reduce to 5.4 percent in 2009 and down to 3 percent in 2010. Mexican ‘peso’ has been badly affected because of decreased oil exports to United States, main trading partner of Mexico.

A Mexico economic stimulus package of $5.6 billion had been announced by their President Felipe Calderon in March 2008. This economic stimulus package in Mexico is being provided in form of utility rates discounts, tax breaks and spending programs. In its efforts to strengthen domestic economy, national government has planned new investments in infrastructure development, housing, agriculture and diversification of exports in economic stimulus package of Mexico.

Agustin Carstens, finance minister of Mexico had estimated a growth rate of 2.8 percent in 2008 as compared to 3.7 percent in 2007. This reduced growth rate is due to a devastating money market and economic slowdown of neighboring United States. Present financial situation in Mexico calls out for an economic stimulus package for Mexico to be provided immediately.

Companies have been given an income tax relief of 3 percent and a reduction of 20 percent in electricity rates as part of economic stimulus package to Mexico. These companies are also provided with certain compulsory payroll benefit options. Mexican state owned oil company, Pemex Oil would increase spending by $935 million in way of repairing its old pipeline network.

Felipe Calderon has said while declaring Mexico economic stimulus package that economic performance of United States of America, its major trading partner has been well nigh unimpressive. Housing sector and financial sector of United States of America have been hit hard by global financial recession and this has in turn affected Mexico as well.

In 2008 finance ministry of Mexico had lowered its estimate of growth for that year to 2.8 percent and this was lesser than 2007 when 3.7 percent had been predicted. This has increased importance of Mexico economic stimulus package.



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