needed to continue operations. VII. Opinion The signs are growing ever stronger that Mexico's determined adherence to its economic austerity program is setting the stage for a remarkably solid and sustainable recovery from the recent financial crisis. The country's Bolsa stock index has rebounded more than 60 percent from its February low, the peso has stabilized, compared to what it has done in the past, and Mexico's recent $500 million bond offering was oversubscribed by $1.3 billion. Mexico is making clear progress in improving its debt structure, and strong export growth is producing a dramatic correction in Mexico's current account imbalance. Mexico has a balanced federal budget and a largely privatized economy. The North American Free Trade Agreement and Mexico's other trade pacts are continuing to play a significant role in creating new opportunities for Mexican businesses. A number of U.S. companies have chosen to create co-production partnerships with Mexican firms over geographically more remote partners in Asia because of Mexico's proximity, modern infrastructure and industrious workforce. NAFTA is playing a key role in encouraging such partnerships. By reducing North American trade barriers, NAFTA is enabling firms which might otherwise manufacture in Asia to work with Mexican partners instead. The growth of business partnerships, along with Mexico's ongoing economic, legal, judicial and political reforms helps to explain Mexico's ability to attract long-term investment. However, the peso is currently in a tailspin against the dollar due mostly to currency speculators. If the Mexican government can stay with its current plans and programs with minor adjustment, the peso should rebound. The bottom line from Mexico is that its continued commitment to open mar...
