Political cycle

Coutino forecasts a 2.7-percent GDP reading for Mexico this year, down sharply from 2006’s 4.8 percent figure. But he also expects a quick recovery in 2008 to 4 percent. Coutino blames this year’s dip on the country’s political cycle.

“Since 1976, every six years in Mexico, which coincides with new governments, has had a recession or at least a slowdown of economic activity,” he says.

This year is proving to be no different than it has been for other new political administrations.

“At the end of each administration, the government uses fiscal policy to spend more and generate transitory economic growth,” Coutino says. “The next President has to start with budget restrictions and cut the federal budget. Public spending contracts during the first six months of each new presidency.”