SAN DIEGO - Mexico's economy, in the grip of the steepest downturn in decades, may begin its long-awaited recovery later this year, according to two economists who spoke recently at a conference on Mexican manufacturing. The worst of the 1995 downturn is over and 1996, probably by the third quarter, could show the beginnings of a real recovery, said John A. Adams Jr., vice president and manager of the international department at Union Na-tional Bank of Texas in Laredo, Texas.
``It is moving,'' he said. ``This will move faster.''
After six consecutive quarters of decline, the third quarter of this year should show a gross domestic product increase of 4.5 percent, said John H. Christman, managing director of Asesor¡a Econ¢mica Especializada SC, a Mexico City consulting firm.
The ``brutal collapse of credibility'' brought about by the December 1994 peso devaluation means that 1996 could be the most important year of the Ernesto Zedillo administration, ``since so much will have to be done to get Mexico back on track,'' Christman said.
Adams and Christman spoke at the MexCon 96 conference on manufacturing in Mexico, held March 25-27 in San Diego.
Adams projects a real GDP increase of 2.2 percent this year, compared with a decline of 7 percent in 1995. He sees inflation - hovering around 50 percent last year - moderating to 29 percent in 1996. He pegs the average exchange rate this year at 8.5 pesos to the dollar.
Christman said Mexico's manufacturing and services sectors remain ``very, very attractive'' to foreign investors. The closing of many small and medium-sized Mexican-owned businesses also left a ``gaping hole'' in the country's economic fabric.
The economists agreed that the maquiladora industry will continue to be a bright spot.
``I don't see any real constraints,'' Christman said. ``I look for continued growth. It's going to be a standout feature of the Mexican economy for quite a few years to come.''
Most of the 2,500 maquiladoras are located along the U.S.-Mexico border, but many new plants are being set up in the interior of Mexico. A maquiladora performs export-oriented manufacturing.
Spurred in part by the devaluation, some 259 new maquilas were registered last year. But Adams said an even bigger story may be in the 400 maquila expansions that also took place in 1995.
Even though the maquila system will change in some technical or legal aspects under NAFTA, to predict its demise is a mistake, he said.
``Maquilas are not going to go away,'' Adams said. ``Mexico does not want to do anything to damage the maquila or offshore manufacturing industries.''
Maquila industries that represent high-demand sectors include metal stamping, plastics molding and extruding, and plating, he said.
``All the way up and down this border we've got new crossing sites, incredible growth,'' Adams said.