Some recent economic figures indicate Mexico's economy is stabilizing and beginning to bounce back from the December, 1994 peso devaluation. The improvement has helped the El Paso economy as well.
Remarks made by Mexican President Ernesto Zedillo, April 15, at the opening of the Mexican stock market convention inspired the market's main indicator to a new high in terms of pesos. Zedillo said Mexico's economy is expected to grow 5 percent this spring compared to the same period last year. The president also delivered good news of new job growth, reduced inflation, and a stable exchange rate. The Peso has been stable at 7.5 to the dollar since late October 1995. The Bolsa de Valores closed at 3,204.69 for Monday, April 15, up from Friday's record high of 3,174.85.
Mexican officials have predicted gross domestic product (GDP) growth of 3 percent and inflation of 20.5 percent for 1996. Many economic analysts doubt the inflation goal of 20.5 percent for the year and claim it is unrealistic. Mexican central bank governor Miguel Mancera told the stock market convention inflation for April should be 2.8 percent and should be below 2 percent a month for the rest of the year. He assured the convention that the central bank would keep a tight grip on the money supply.
On Wednesday, April 17, Mexico announced it will issue between $1 billion to $2.5 billion in new bonds. The 30 year, dollar denominated bonds will be swapped for the U.S. backed Brady Bonds. This will lower interest rates on Mexico's loans and achieve longer terms for repayment. The news of the bond sales had a positive impact on investors, sending Mexican bond prices higher. The news bolstered the peso to a new high of 7.42 to the dollar.
The economic crisis in Mexico had a negative impact on El Paso merchants since an estimated 20 to 40 percent of the city's retail sales come from Mexican shoppers. Most El Paso stores stopped accepting pesos after the devaluation due to the currency's instability from day to day. Signs in Spanish telling shoppers that the store accepts pesos are now starting to return all over town.
The El Paso economy is beginning to show signs of recovery from the devaluation. El Paso's sales-tax revenue has increased for two consecutive months for the first time in a year. The city received sales-tax revenues of $2.8 million for March, up 6.3 percent from March, 1995 and revenues of $2.7 million for April, up 4.1 percent from April, 1995.
Retail sales at the Sunland Park Mall have improved for the last few months as well. Mall marketing director, Cindy Foght said for both "January and February we're showing increases. . .The peso now has stabilized. It's a good sign for us." For January, mall sales were up 8 percent form January 1995 and up 7.9 percent for February from the previous year.
Retail sales have improved all along the Texas-Mexico border according to sales-tax receipts data from the Texas state comptrollers office. Sales-tax revenues are up 18.7 percent state-wide. Figures for major cities are as follows.
| Texas Cities | April 1995 | April 1996 | Change |
|---|---|---|---|
| Laredo | $703,276 | $728,892 | +3.6% |
| El Paso | $2.6 million | $2.7 million | +4.1% |
| Brownsville | $946,908 | $1.05 million | +11% |
| Austin | $5.3 million | $5.9 million | +11.5% |
| Houston | $16 million | $18.7 million | +17% |
| Dallas | $10.1 million | $12.1 million | +19.8% |
| San Antonio | $6.3 million | $7.7 million | +22% |
| Fort Worth | $3 million | $3.8 million | +24% |
(Sources: Associated Press, Jim Weddell, El Paso Times)