The market is taking it positively, it's rallying since this number came in.

This number combined with the other high numbers is going to force the government to keep interest rates high and make sure the budget is austere for the next year. High rates are bad news for equity holders.

In general, the passage of the budget is expected to go smoothly, given it contains little that is new or controversial.

Investors are sitting on profits in Mexico and are taking them now, given the nervousness in Argentina. I do not think this signals a fundamental change in the long-term trend in Mexico.

While there is evidence that GDP growth has touched bottom, the recent tax increases on certain consumer goods, electricity and metro price hikes, more moderate real wage rises, and rising unemployment are probably going to impact consumption in 2002.

Mexico would become a safe haven should the situation worsen in Argentina.