This year's holiday shopping frenzy might be only an illusion of an economic recovery

CNNExpansion/Reuters

Thousands of people have been filling Mexico's stores for weeks as the country begins to emerge from its worst recession in seven decades. But it seems more an illusion resulting from aggressive holiday discount campaigns than a sign of real economic recovery.

While Mexico's recession officially ended in the third quarter, it has yet to regain growth.

As a result, the main shopping centers are betting heavily on discounts, and the temptation is great.

"There are some days left before Christmas, but I found good sales so I took advantage of them," said Teresa Saldivar, a 76-year old woman who lives on a small pension but was buying multiple gifts at a department store.

"It's Very convenient to buy right now," she said.

The holiday scene contrasts with the festive season last year, when anxious Mexicans spent extravagently in the face of the gloomy economic outlook foretold when the crisis erupted in the United States, Mexico's largest trading partner.

Although the economic slump in 2009 exceeded all expectations - a contraction put at 7 percent by the central bank - residents of the huge metropolitan area of Mexico City seem to have regained the desire to buy.

While retailers in the country are fueling that fever with their deep discounts, it might prove to be a risky strategy in which they are sacrificing profit margins in order to sell the highest volumes possible.

"Now we're offering three-day promotions on items that were sold in previous years without any discounts," said Gustavo San Vicente, a worker in a luxury department store in the western part of the city.

The increased sales do not mean that Mexicans have more money in their pockets.

"Stores can be jammed but what these people are buying? They're buying only items that have super discounts and been super promoted," said Raquel Moscoso, an analyst at Ixe Financial Group.

Although final figures for the Christmas sales won't be released until next year, department stores such as Soriana, the second largest retailer in the country, anticipate austere results.

"We don't see a great improvement" over last year," said Aurelio Adan, the firm's chief financial officer.

Last December ended up being a black month for retailers. A rise in unemployment and declining domestic production resulted in collapsing sales by 10.7 percent during the full holiday season, according to industry figures.

In light of that data and the behavior of the economy, the enthusiastic consumerism being seen this December might be a mirage rather than a sign of significant improvement.

www.cnnexpansion.com/economia/2009/12/18/rebajas-navidenas-tientan-a-mexicanos