The domestic economy...

The growth rate Hacienda is projecting for 2011 (3.8%; now, thanks to the Chamber of Deputies, 3.9%) is higher than the 3.6% consensus projection of the economists surveyed by the Banco de Mexico each month and the 3.5% I'm projecting. Why? Hacienda is assuming the domestic market will play a more important role in driving growth next year. How likely is it that the domestic market will step up to the plate?

Three factors are critical: 1) job creation; 2) real wage growth; and 3) the growth rate of bank lending to consumers. I'm not overly optimistic on any count. Job creation will continue to be inadequate. Real wage gains will be small. Bank lending to consumers will grow but at modest rates.

We'd better hope that US exports do well and American consumers become more animated.