The Mexican Economic Crisis (2007-2009)

The possibility of a recession in Mexico as a consequence of the US mortgage crisis in 2007 had been repeatedly denied by Mexican officials throughout 2008. They said Mexico had maintained macroeconomic stability since the end of the 90´s that made it resistant to external shocks of that kind. In comparison with 1995, Mexico had in 2008 price stability, a modest economic growth, plenty of foreign reserves, fiscal stability, sustainable current account deficit and a strong currency. Nevertheless, macroeconomic indicators started to deteriorate rapidly by the end of 2008, triggering an economic downturn of a kind not seen since 1995. In spite of the supposed strength of the economy, the present crisis seems to be even worse than believed and threatens to undermine once more the economic framework that was designed to avoid current account imbalances of the sort Mexico had suffered over the previous 40 years.