Our dire cover story about Mexico was too positive. Drug violence, corruption, recession and a struggling oil sector have battered the economy, driving GDP down by a projected 7% this year, a much steeper decline than the worst-case 0.7% GDP shrinkage we forecast.rnMexico has been struggling with new problems. Swine flu cut into the country's service and tourism industries by some $4 billion. A summer drought made July the driest month in 60 years, knocking 30%, or $1.5 billion, off the next white corn and sorghum harvest. Water is rationed in Mexico City.rnMexican workers abroad wired 18% lessrnmoney home in the second quarter than in the same quarter of 2008. In May S&P downgraded its Mexico outlook from stable to negative.
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