Early initiatives by the president, Felipe Calderon of the Partido Accion Nacional (PAN), have been popular, and there have been improvements in governability despite the president’s minority position in Congress. Mr Calderon’s proactive courting of cross-party support for his legislative agenda has so far paid off, with the approval of pensions and fiscal reforms this year, both of which had been blocked under the previous administration (2000-06). Strong momentum could facilitate the passage of other expected reforms but many of these are controversial, and with mid-term elections approaching in mid-2009, the government’s window of opportunity is relatively small before governability begins to deteriorate. Economic performance will remain linked to that of the US, and GDP growth will be much lower in the forecast period than in the peak years of 2004-06, reflecting weaker US import demand and manufacturing. With oil prices stabilising and export earnings growth outstripped by imports, the trade deficit will widen, but the financing requirement will be manageable.