Return of Confidence

Nearly two years after the drastic devaluation of the peso (TIME, April 26, 1954), Mexico's economy looked handsome and husky. Last week the Nacional Financiera (a government financial corporation similar to the U.S. Reconstruction Finance Corporation) reported that private investment rose a huge 40% in 1955 and is expected to increase again in 1956. Some other signs of the good times:

P: The trade deficit was cut from $163 million in 1954 to $118.7 million in 1955; at the end of 1955 there was a $66.7 million surplus on international payments, compared to a $41.1 million deficit in 1954.

P:Overall production rose 10% in 1955. Production of cotton, the nation's No. i export commodity, rose 15%, with a bumper 2,000,000 bales.

P:With the nation's dollar reserves at an alltime high of $410 million, the government submitted a record $528 million budget for 1956 with full confidence that it will be balanced for the second year in a row.

Although two good crop years and a record tourist influx have contributed to the boom, it would have been impossible without a revival of confidence in Mexican business circles. Chief architect of the confidence has been hardheaded Treasury Secretary Antonio Carrillo Flores, whose policy of reduced government intervention in business slowed down and then reversed the flight of capital that resulted from post-devaluation jitters in 1954. Nobody knows better than Economist Carrillo Flores that there are still bad spots in the Mexican economy. Antiquated labor laws hamper development of the textile industry, for example, and Mexican agriculture is still too dependent on cotton.

Despite these danger signals, Carrillo Flores is confident that if the government does not impose further controls to stifle business growth, the economy will develop its own counter-inflationary forces. The latest reports suggest that he is right: in the last quarter of the year, the cost-of-living index and wholesale prices were held to a modest 1% rise.

This file is automatically generated by a robot program, so reader's discretion is required.