hen we are too optimistic we can loose our attention and forget to act according to the real risks we are facing. When we are too pessimistic we can paralyze ourselves up to the point where we exacerbate the problem. Where can we find the perfect fit?

    The  Central Bank (BANXICO) has changed its growth expectations for 2009 to -6.5%  and -7.5%. The constant adjustments to the economic forecasts during this year reflect the reluctance to accept the real effect of the crisis. More than that, this “hesitation” has delayed the decision making process that could lead us to recovery.

    The Mexican economy has possibly reached the bottom during April and May. Nevertheless, the upward recovery might be a slower process than expected. This is why we cannot ensure that the worst has is gone because we are still living in it. The global economic activity indicator (IGAE) published by the National Institute of Statistics, Geography and Informatics (INEGI), dropped -12% in April  and -11% in May, as a result of the weak internal market, uncertainty, fragility of the fiscal policy and the A H1N1 influenza, among other factors.

    We have yet to see the behavior of July and September which are typically slow.  In the current juncture, there are no elements that suggest that the Mexican economy will recover in the following months. The apparent improvement in the trade balance only reflects that production has dropped in about the same proportion in terms of domestic consumption and exports; this due to the depression of supply imports. The industrial production indicator continues to fall at two digits rates and it will probably continue to do so for a couple of months during the second half of the year

    With its revised forecast, BANXICO indicates that the Mexican economy will be reducing the pace of the fall by the second semester by almost half of that during the first half. The question is: Given the structural weakness that rules in the domestic market, do conditions exist for this to happen soon?. The Trade and service sectors are not showing signs of recovery and are falling constantly.  Employment continues to be depressed and therefore the Central Bank estimates that up to 735 thousand work places will be lost in the year. In Consultores Internacionales, S.C., we estimate that the jobs lost could amount to one million, and that we might see a return of the sanitary alert.  

    The public sector will have an unforeseen deficit which will impact not only in the anti- cyclical programs, but also the investor’s trust in Mexico in the short and medium term.  

    In this context, Consultores Internacionales, S.C., has been adjusting its forecast on a timely basis and, according to the Tlacaelel model, we estimate that the economy will fall between -8.2% and -9% in 2009 and we expect that this will be the last important downward adjustment in the year because decision makers and society base their strategies on clear information.

    This crisis has been characterized for the disbelief and confrontation between optimistic and pessimistic visions. What we must consider is that we are in the middle of a historic ridge waiting for the reconfiguration of the world’s monetary and financial system which is everything, but simple.