TRAVERSE CITY, MICH. - Mexico may not pull out of its severe recession until late this year or the first quarter of 1996, but it already is making great progress toward a gradual economic recovery, a former General Motors Corp. economist said. Moreover, the crisis triggered by last December's peso devaluation has accelerated economic and political reform movements.
``The changes in Mexico are absolutely phenomenal,'' said Enrique S nchez, director of emerging markets for NationsBanc Capital Markets Inc. in Charlotte, N.C. Before joining the bank last year, he was GM's international economics director.
S nchez spoke Aug. 8 at the University of Michigan Management Briefing Seminars in Traverse City.
He said several important indicators show that Mexico has begun to recover. The turning point came in early February, when an international bailout package allowed the country to begin fixing the damage caused by the government's botched peso devaluation.
The government, S nchez said, has been able to repay its short-term debt, something it could not do during the last great economic crisis in 1982 when Mexico ``was a completely different country.'' Mexico has repaid $21 billion worth of tesobonos, or government securities, out of the $29 billion that were outstanding at the end of 1994, he said.
Inflation and interest rates are declining and the government has reversed a trade deficit and begun building currency reserves. The result is greater confidence in the peso.
``In the last two months, I would argue, the peso has regained stability,'' S nchez said.
Still, the crisis has exacted huge social and economic costs on Mexico and many risks and uncertainties remain.
Preliminary estimates indicate that Mexico's gross domestic product, the chief measure of its economic output, declined by 5-6 percent in the second quarter.
S nchez described the crash as ``the largest decline in any quarter that I have seen in 20 years of following Mexico.''
S nchez forecast that GDP will rebound, at best, to a growth rate of 3 percent in 1996 in Mexico and then average about 4 percent through the remainder of the decade.
Still, he added, ``Do not underestimate the tough times that are ahead for the next 12-18 months.''