Reliant upon consumption in the US, Mexico’s economy has suffered mightily this year. The pillars of state revenue—oil, remittances, and tourism—have been shellacked, thanks not only to recession in the US but the outbreak of H1N1. First quarter projections had the Mexican economy on track to contract by 20%! More recent forecasts expect GDP to shrink by 6%-7% for 2009, still heinous by industrialized nation standards. Despite these setbacks, I would like to point out two examples of how Mexico is helping its neighbor to the north.

Rising unemployment in the US is slowing the trend of northward migration. While fewer Mexicans are seeking work in the US, the ones that have already crossed the border aren’t returning home en masse either. Given the risks of associated with returning, to say nothing of the exponentially higher wages if one can land even intermittent work, most undocumented Mexicans in the US are staying put. And drawing on family support to stay afloat.

Immigrants’ families are now sending money to their loved ones in the US, reversing the trend of remittance payments. “This was something that was never seen before,” says Demetrio Sotamayor of the Chihuahua state tourism department. Mexico’s Interior Ministry has not released any numbers on the amount of money being sent to migrants in the US, but evidence of the trend is increasingly apparent throughout Mexico. The monies being sent are most likely the immigrants’ own savings, so the reverse remittance pattern isn’t mere filial charity. Other factors, such as the proliferation of pawnshops in Mexico, are also being drawn on as a source of easy cash.

Meanwhile, Mexico is proving to be a recession-defiant market for American business, remarkable given Mexico’s boom-bust heritage. (Prior to the recession, Jim Cramer referred to stocks of Latin American companies as “always a trade.”) Foreign investment in, say, the 1970s yielded high returns for the next several years. Investment in 1981 would have been worth less in 1990. The particular industry that is excelling is even more surprising: banking. Banamex, Mexico’s second-largest bank, made $750 million in the first half of ’09, a handsome sum amidst the recession’s nadir. And at just the right time for Citi, which owns some 34% of Banamex. Varying estimates suggests that Banamex accounts for between 15-17% of Citi’s profits. Problem is, Mexican law prevents foreign governments from operating banks in Mexico and because Uncle Sam has a sizable stake in Citi at the moment, on the surface the association runs afoul of Mexican law.

If Citi is forced to sale, Banamex could fetch $20 billion. A divorce would surely benefit Banamex. Unlike many banks in emerging markets, Citi doesn’t much help Banamex with lower funding costs. Also, in shearing the Citi chord Banamex would be well situated to attract previously reluctant customers. The benefits approach nil for Citi. Exposure to toxic assets ensure Shiti will not be making money in the US for years to come, so reliance on foreign markets like Mexico is really the only reason the lumbering lout of American banking does not have to go hat in hand back to Washington to ask for more money.

These anecdotes do not add up to the conclusion that Mexico is going to boost America’s recovery. The Mexican economy ($1.3 trillion) is just too small compared to America’s ($14 trillion). But the well-steeped notion north of the Rio Grande that Mexico is a general nuisance is ignorant. Mexico aids America’s development. In good times, when the US economy is growing and unemployment is low, Mexicans seek low-wage jobs in the US, thereby keeping inflation down. In bad times it seems Mexico is also lending a hand.