The slowdown in US growth should put it on the path of of 1% to 1.5% GDP increase this year, which will keep unemployment high.
For Mexico, our revised growth estimate for 2012 is 2.0%, based on a slowdown in export growth. We expect growth to be lower in the second semester than in the first.

We consider the problem of the eurozone as impossible to resolve in the terms in which its political leaders intend to. Fiscal austerity will not reduce the fiscal deficits enough and will cause rising social protest. The latter should undermine the incumbent governments and their leadership. The main problem at the origin was the loss of competitiveness and industrial structure in the peripheral countries at the time that they became indebted in a scandalous degree. Addressing the indebtedness is not enough, as they would need a period of years with a much weaker exchange rate than they would conceivably have under the euro.

China should similarly slow down in response to weaker domestic demand and credit growth and especially to lower export growth.

Latin American countries will slow down, mainly because of lower world demand for their raw materials, but in Brazil also for an unsustainable expansion of domstic credit which now needs to be arrested.

Deterioration in the global business climate and confidence led us to revise Mexico’s GDP growth to 2.0% in 2012 and 2.5% in 2013. We expect that in the first half of 2013 the new government will try to reduce public spending and revisit the need for tax increases, althoguh this in the end will depend on what is the state of the economy this year. But, anyway, the upward trend in current public spending is unsustainable .

Public finance has remained relatively tight insofar as it follows the target of a low fiscal deficit. Nevertheless, the government has continued to expand current outlays while reducing investment spending. This strategy is clearly wrong and will need to be revised, making the task for any new government very complicated, especially in the context of a weak world economy. 

We have also revised our inflation forecast upwards to 4.4% in December. This is because the peso is likely to remain weak for most of the year, leading producers to mark prices up.

The social and political environment is likely to worsen in 2012, as the Calderon government tries to intervene in the election for presidential candidate of his own party (PAN), at a time when public opinion is turning negative on account of deaths claimed by violence approaching 55,000. This suggests he will also try to intervene in the presidential election, which will bring about tension with the two opposition parties.