2012 Can Mexico's economy continue to grow this year, or will the problems affecting other countries finally catch up with it?

Mexico faces testing times in 2012 Can Mexico's economy continue to grow this year, or will the problems affecting other countries finally catch up with it? 15 February 2012 Last updated at 12:35 GMT

Mexico faces testing times in 2012

By Will Grant BBC News, Mexico

Oil has been one of the three main pillars of the Mexican economy

Last month, the Mexican President Felipe Calderon felt compelled to share some comments by Nouriel Roubini, Professor of International Economics at the Stern School at NYU.

"Mexico doing well: low debt, low deficit, low inflation, good growth. Emerging markets in much better shape than most advanced economies," Dr Roubini's comment on the social networking site Twitter read.
Dr Roubini went on to describe the Mexican president as "a thoughtful and visionary leader". Little wonder, perhaps, that Mr Calderon deemed him worthy of a retweet.
Dr Roubini made an important observation about the state of the Mexican economy. Compared to many major economies around the world - particularly its powerful neighbour to the north - Mexico is performing well.

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• Country profile: Mexico

Its GDP growth for 2011 was 4.5% and projected growth for 2012, though down on previous years, is at 3.5%.

"Mexico needs to keep growing and distance itself from fiscal crises in other countries," said the country's then finance secretary, Ernesto Cordero, last year.
But staying unaffected from problems both at home and abroad won't be easy.
The Mexican economy is based on three main areas: oil, tourism and remittances from Mexican nationals living abroad. While oil revenues looks set to remain strong this year, the other two sectors look vulnerable.
Falling remittances The country's well-documented drug violence, which has seen more than 47,500 people killed since 2006, is putting off both tourists and investors coming to Mexico says economist Julio Boltvinik.
"It is the worst of scenarios for a heavily tourism-based economy like Mexico's to have the kind of violence it is currently experiencing, splashed across news bulletins around the world," he says. "Terrible scenes of beheadings and bodies everywhere. It's making people scared to come here."
To counteract the negative perception, the Mexican government has launched a slick marketing campaign, called Mundo Maya, to encourage visitors to the country before the symbolic end of the Mayan calendar in 2012. They hope it will help generate as many as 52 million foreign tourists to Mexico by the end of the year.

Tourists have flocked to Mexico - but will fears over security hurt the industry?

But remittances are also falling. Mexico has seen a significant drop in migration recently. So much so that a respected long-term survey of the trend, the 'Mexican Migration Project' at Princeton University in the US, says that for the first time in 60 years the movement of Mexicans to the United States is at a net zero. A mixture of tougher anti-immigration legislation in the southern United States, combined with fewer job prospects in the US have forced many Mexicans, it seems, to come back home.
"Remittances are something that is out of our hands," says Mr Boltvinik. "As we haven't been creating enough jobs recently, we've been exporting over the past eight to 10 years more than half a million Mexicans abroad. And they send important quantities of money back to their families.
"However, the amount they can afford to send depends on how the North American economy performs."
In essence, he says, the economic challenges in Mexico are a microcosm of the wider problems facing the country. Until security is brought under control, it will be increasingly difficult to depend on the traditional pillars of the economy.
Informal economy Manufacturing and exports might provide the key, Mr Boltvinik believes, as thus far they have been relatively unaffected by the issues of organised crime and drug cartels in Mexico.
Car-making has always been key to Mexico and Nissan recently announced $2bn (£1.27bn) of investment in the country. At Davos last month, Coca Cola also said it would be investing a further $1bn (£640m) in Mexico, creating an estimated 10,000 jobs.

The country's battle against drug gangs continues to cause concern across the world

It is welcome news for the Calderon administration, especially as the informal economy has been growing fast, responsible for as many as three in every four jobs over the past ten years.
This year is an important one for Mexico. In June, the country will host the G20, and in July there is a presidential election.
In current polls, the governing party of Mr Calderon looks set to lose out to the party which ruled Mexico for more than 70 years, the PRI. However, there are still several months to go and the gap is by no means unassailable.
The owner of Club Deportivo Guadalajara football club, and one of the richest men in Mexico, Jorge Vergara, told the BBC that whoever wins July's election has a tough job on their hands.
"I wouldn't want to be in their shoes", he said of the next president of Mexico. "But I also believe Mexico has passed through its worst stage of growing its democracy and now the chance has come to consolidate this democracy."

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