Mexico: Large, Immediate Negative Impact and Weak Medium-Term Growth Prospects
Figure 8.1. Income per Worker and TFP Annual Growth, 1980–2007 10 8
TFP growth, % per year
6 y = 0.8456x – 0.2599 R2 = 0.9612
4 2 0 –2 –4 –6 –8 –10 –10
–8
–6
–4 –2 0 2 4 income per worker growth, % per year
6
8
10
Source: World Bank data; author’s estimates.
The Immediate Impact of the Crisis The global financial and economic crisis had an immediate and broadbased impact on the Mexican economy. This was transmitted to Mexico in several ways. Channels of Transmission The crisis was transmitted to the Mexican economy through the channels of trade, remittances, tourism, FDI, external financing, exchange rate volatility, and oil prices. All of these channels had a negative impact on the Mexican economy and highlight why Mexico was the most affected country in the Western Hemisphere—and one of the most affected in the world—by the global crisis. Exports. A key transmission channel has been Mexico’s trade relation-
ship with the United States—the destination for nearly 80 percent of its exports. Indeed, the collapse in U.S. demand for durable goods led to a sharp contraction in the demand for some of the most important Mexican export products such as automobiles (–24 percent) and
365