Cover Story

TABLE: Mexico's Economic Dilemma

The government is trying to create an export platform while suppressing

consumer spending--and inflation. That pleases international financiers, but

businesses depending on the domestic market are in trouble.

KEY MEASURES CONSEQUENCES

Maintain tight Spurs exports and keeps current account in balance,

monetary and fiscal but businesses suffer from slumping demand as

policy; keep peso low. unemployment soars.

Boost internal savings Could eventually reduce dependence on foreign

through privatization capital but will take several years to pay off.

of state pension schemes. Political opposition expected to be significant.

Step up privatization Will attract investment and boost competitiveness

of petrochemicals by improving infrastructure, but some industries

and communications. worry about layoffs.

DATA: BUSINESS WEEK