Mexico can fight crisis better now, banker says
MEXICO CITY - Reuters
![Mexico can fight crisis better now, banker says](http://image.hurimg.com/i/hurriyet/75/0x0/59c6f48d45d2a027e839e201.jpg)
Mexico’s Central Bank Gov Carstens speaks during an interview on May 28. REUTERS photo
Mexico is in a better position now to deal with a global crisis than in 2008 given record international reserves and a more solid private sector, central bank governor Agustin Carstens said on May 28.Even as investors pushed risk premiums on Spanish debt to their highest levels since the launch of the euro, Carstens said he had faith in the efforts euro zone countries were making to prevent contagion from Greece’s woes.
Fallout for Latin America’s No. 2 economy should therefore be moderate, even if Greece did leave the euro - which the Bank of Mexico saw as unlikely.
Carstens downplayed the risks to Mexico’s financial sector, which is dominated by Spanish names such as BBVA and Santander, saying local banks had sound capital buffers and annual credit growth above 10 percent was helping the economy grow.
“Mexico is quite resistant,” he said at the Reuters Latin America Investment Summit. “I really think we are in a position of strength.”
Mexico, with its close ties to the United States, was one of the worst-hit among emerging market economies following the collapse of investment bank Lehman Brothers in late 2008, suffering a more than 6 percent contraction in economic output in 2009.
But Carstens, who was finance minister at the time of the financial crisis, said Mexico now enjoyed deeper pockets, with international reserves worth $155 billion, and the protection of a flexible credit line with the International Monetary Fund.
Unlike in 2009, Mexico is not struggling with either a swine flu epidemic or risky derivatives bets by private companies, such as the soured currency wagers that nearly drove cement maker Cemex into bankruptcy, Carstens said.
But as in 2009, a high share of credit originates with Spanish banks, whose weakness could force Spain to seek an international bailout. Lending by euro-area banks in Mexico fell 14 percent in 2008 and Bank for International Settlements data show they account for more than 35 percent of Mexican credit.
Carstens said BBVA Bancomer, Mexico’s largest bank, had been one of the country’s most aggressive lenders.