Current economic conditions make it difficult to increase the pace of employment creation. The unemployment rate settled at 3.8% in November 2003. Private consumption continues to grow. Retail sales rose 4.5% in real terms in October 2003.

GDP growth projections for the fourth quarter of 2003 settled at 1.86%, according to private sector specialists. Factors that could constrain economic performance are the lack of improvement in structural reforms, and the domestic political and economic uncertainty [SRE Jan 2004].

Mexico's economy has gradually recovered from the 1995 crash, even weathering  the effects of the Asian financial crisis of the late 1990s.

The nation's financial markets performed well during 1999, and more recently reacted  favorably to the election on July 2 of Vicente Fox, of the pro-business National Action Party (PAN), to the nation's presidency.

In general, Mexico offers  foreign companies a chance to profitably invest and do business. The Mexican  consumer market is growing rapidly, skilled labor is available and relatively cheap, communications and transportation are quickly improving and there is ready access to U.S. markets, the United States and Mexico have signed a workable tax treaty, and NAFTA is working as projected and expected to provide  increasing trade benefits.

There are two areas of current concern, both of  which should be resolved as the economy evolves along with greater democracy.  The first of these is a high crime rate, particularly in urban areas and along  the nation's highways. An increasing number of trucks are being hijacked and  robbed, and there is a high level of concern for personal safety among tourists  and residents in cities such as Mexico City, Guadalajara and Monterrey. The government is working hard to solve this problem, but everyone realizes that its has no short-term solution. In the interim, tourists and foreign businessmen are well advised to stay alert to possible dangers, exercise caution and refrain from dressing or acting ostentatiously.

All current political and economic concerns  eventually end up affecting the exchange rate. While the government may attempt to influence currency flows through interest rates and occasional direct  interventions in exchange markets, the peso will remain volatile into the foreseeable future.

Businessmen and investors must pay careful attention to  exchange rate tendencies, since good business and good investments in peso terms could look very different when translated to dollars, especially if peso value decreases unexpectedly.

Mexico's consumer market offers attractive possibilities for all kinds of foreign businesses. Most of the Fortune 500  companies have been here for years. But since NAFTA was initiated, a host of smaller companies have made direct investments in the economy, not only to profit from local market possibilities, but to initiate export operations.

In 2000 a Free Trade Agreement (EFTA) has been signed between Europe and Mexico. Late 2001, same has been done with Switzerland. Mexico is one the best place to invest for small and middle companies.