Yesterday Mexico became the latest country to disclose a sharp economic contraction as a result of the slowdown in US consumption of imported goods. Mexican GDP fell at an annualized rate of 21.5% in the first quarter, following Germany, down 14.4%, and Japan, 15.2%—its worst performance since 1955. As the Wall Street Journal reports, declining US demand is taking severe effects on exporting nations.
The Fed is anticipating only a "gradual recovery" for the US beginning this summer, but unemployment is expected to remain above 9% through 2010. That's troubling news for American trading partners, particularly NAFTA member Mexico, where auto production has tumbled 41% year-over-year. The depth of the global recession will only intensify calls to restart the Doha Round of trade talks, which have been stalled since last summer.