More Dependent On Re-Exports

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Although 2009 was a tough year for Mexican exports, down 21.2% from 2008 levels, a fall in domestic demand saw imports contract by a more rapid 24.1%, which helped the economy register its lowest trade deficit in 12 years. At the outset of the downturn in mid-2008 we had anticipated the contraction in export growth to outpace that of imports, similar to the pattern which played out in the aftermath of the Tequila crisis in 1994. However, this time round the lag was much less evident, implying domestic consumption is now more susceptible to a downturn in exports.