What's North America's healthiest economy? Believe it or not, right now it appears to be Mexico, which posted 5.6% annual growth in the second half of last year, while its two trading partners to the north sank deeper into a slump. The acceleration, says economist Robert Gay of Morgan Stanley & Co., reflected a surge in fixed investment, particularly by foreign companies responding to Mexico's new economic stability and more liberal investment rules.
Gay points out that a growing share of new foreign direct investment will be coming from Asia, with Japan alone committing $3 billion last year for future investment projects. And with a free-trade agreement on the horizon, foreign interest in Mexico should quicken. Morgan Stanley expects Mexico's economy to grow 4.2% this year and 4.5% in 1991.