Amid last year's financial rescues, the Federal Reserve extended financial support to four emerging economies, lending $30 billion each to the central banks of Mexico, Brazil, South Korea and Singapore to help them cope with the fallout of the crises roiling markets around the world.

The strains in Mexico are certainly evident. Between late September and mid-October, the peso fell by approximately 20% against the dollar, while prices on Mexico's stock exchange, the Bolsa, fell 34%. However, even before the Fed could make up its mind to help, circumstances in Mexico were improving.

From mid- to late October, the peso rallied by some 7.5% against the dollar, while the Bolsa rallied some 18%. Both moves clawed back from previous losses. This may seem like a minor point, but in a very fundamental way, these partial recoveries, before the Fed's help arrived, tell the story of the growing resilience of Mexico's economy and finances.

Of course, under the circumstances, Mexico could not have avoided economic pressure. America's economy has weakened and the U.S. buys fully 80% of Mexico's exports. Consequently, economic activity in Mexico has suffered significantly. But, at the same time, the country has shown itself remarkably less vulnerable to U.S. events than it once was. Decoupling may overstate the new situation, but Mexico's huge oil sector, its much improved fiscal situation and the nation's economic reforms of the past decade have offset some of the ill effects flowing from the States. These factors also promise a positive long-term economic momentum that makes the recent weakness more a bump in the road than a lasting concern.

U.S. economic reversals certainly have had their effects, with anemic real growth of less than 1% during the past four quarters slowing Mexican export growth. The annualized Mexican growth rate dropped to approximately 4.5% in the second quarter from nearly 9% in 2007. Moreover, remittances home from Mexican workers in the U.S. have also dropped, by 2.2% during the past year.

Accordingly, the Ministry of Finance has revised its real growth expectation for 2008 to approximately 2.8% from 3.7%. The Bank of Mexico now estimates 2008 growth to be 2.3%. Private forecasters have made similar adjustments. Relatively recent data on the second quarter gross domestic product (GDP) shows an annual real rate of expansion of 2.8%.

While the downward revisions are hardly surprising, given U.S. performance, it is remarkable how positive the circumstances and the outlook remain. The Mexican economy of 10 to 20 years ago would have suffered much more. As recently as 2001, a rather mild U.S. correction brought about an outright decline in Mexico's economy, which then struggled for two more years to show respectable real growth.

Clearly things have changed from the past. That change would seem to turn on three hinges: general economic reform; improved government finances; and oil.

By now, of course, the general reform story in Mexico is familiar even to those with only a passing interest: The 2000 election broke the PRI political party's monopoly and allowed the government at last to experiment with policies that have made the Mexican economy demonstrably more dynamic and more business-friendly.

Less widely known is how government finances have also improved. In 2007, Mexico ran close to a balanced budget. And because public finances have remained prudent for some time, Mexico's outstanding public debt now amounts to only approximately 25% of GDP. (For perspective, U.S. public debt amounts to more than 60% of GDP.)

With public finances in such good relative condition, the government has been able to spend on needed infrastructure and in the process has offset much of the ill effects of U.S. economic weakness. Oil revenues well above budget have only allowed for more lavish spending.

Obviously, Mexico still has several significant economic hurdles to clear, even apart from the challenge of the U.S. financial slowdown. Mexico will need many years of public and private investment in infrastructure, modernization and education before the country's productivity can justify wages anywhere near comparable to those north of the border.

Mexico also needs to reform its management of the oil industry. It's unclear whether President Felipe Calderón's recent controversial oil reform proposals are the answer.

And then there is crime. Even though crime statistics have improved dramatically during the last five to 10 years, the Ministry of Finance still estimates that organized crime adds between 5% and 10% to the cost of doing business in Mexico, and shaves as much as one percentage point a year off the country's GDP growth.

While challenges remain, recent evidence of a modest decoupling from the U.S. speaks volumes to the huge progress made thus far.