We can highlight the fact that Mexico has experienced a “normal” recession since 2001, if such a word is allowed.
Throughout decades, Mexico knew the dark side of recessions, the one that we used to call “crisis.” However, the experience that we have had with the recession that started in 2001 and the incipient recovery of 2002 has been quite different: •  The public deficit has been close to its target in the last two years;  •  In 2002, the current account deficit was below 3% of GDP and was financed almost entirely by FDI;  BIS Review 19/2003  1  •  The exchange rate was relatively stable in 2001 and 2002, and actually, current peso depreciation has not affected the price level because exchange-rate pass-through has been virtually nonexistent;  •  Inflation has been under control;  •  The main peso-denominated nominal interest rates have fallen to single-digit levels, and the government and some private enterprises are issuing bonds in pesos at longer terms (up to ten years);  •  Foreign direct investment reached a record high in 2001 and maintained a high level in 2002.