Mexico City has had a tough year. From swine flu to a lagging economy, political unrest to drug trafficking, the City of Palaces has found good news in short supply. Resiliency has always been part of the Mexican capital’s character, though, and through thick and thin it manages to thrive. It is, after all, also known as the City of the 21st Century, a nod to its status as a sprawling capital, economic and political center and cultural heavyweight. Furthermore, Mexico is preparing to celebrate 200 years of independence.

Safety and judicial reform legislation in addition to aggressive military-led operations against organized crime and drug traffickers have been among the priorities of President Felipe Calderon, who has raised the pay for the military and is attempting to get rid of corrupt federal police officers and prosecutors.

Even with the obvious drawbacks, upscale properties still want to locate in Mexico City. Hotels are attracting guests with gentler pricing, stylish restaurants are luring diners with sophisticated contemporary Mexican menus, and old sections in need of a makeover are being renovated. With their centuries-old underpinning, those run-down neighborhoods are emerging as new culture-rich areas. Mexico City already has a treasure trove of irreplaceable classic art and a rich, contemporary art scene that continues to explode.

As the oldest city in the Americas moves aggressively to answer its challenges, the time may be right to pay a visit to this most colorful of Western destinations. Surrounded on three sides by tall mountains and volcanoes, most notably snow-peaked Popocatépetl and Iztaccihuatl, the city known locally as D.F. (pronounced deh EH-feh) is home to the super-rich, the extreme poor and everyone in between. Twenty million people live in its metropolitan area.

As it shares 2,000 miles of border with its powerful northern neighbor, Mexico is, predictably, the United States’ largest regional economic partner. Its economy has been affected by the recent U.S. downturn, but the impact seems to be softening after two brutal years. In fact, Mexico’s economy is growing, albeit very slowly; and the outlook for a recovery this year remains positive. The gross domestic product fell 7 percent last year as the global financial crisis worsened, U.S. trade declined and the H1N1 virus kept both tourists and potential investors away.Still, the economy rebounded in the third quarter. Manufacturing and non-oil exports are believed to be the near-term engines for growth, although they will be relatively small. The GDP is predicted to grow about 3 percent this year, well below 2008 levels.

In any case, a stable and prosperous Mexico is vital to the United States. Mutual interests include trade, economic reform and drug control. The two countries and Canadaare partners in the North American Free Trade Agreement and the Security and Prosperity Partnership, which are designed to enhance cooperation, improve security and drive economic growth in North America.

More than 18,000 companies invest in Mexico, with the United States accounting for nearly 50 percent of all direct foreign investments. Leading U.S. exports to Mexico include electronic equipment, auto parts and chemicals, while major exports from Mexico to the States include petroleum and cars. Mexico’s exports to the U.S. make up about a quarter of its GDP. It is the world’s eighth-largest supplier of crude oil and the third-largest supplier of oil to the United States. Oil, along with natural gas, is responsible for one-third of Mexican government revenues.

Mexico City ranks eighth in GDP among 30 world-class cities and accounts for more than a third of the total Mexican economy. Most of the large regional and international corporations are located here, mostly in the upscale Polanco and Santa Fe districts. While Greater Mexico City has about 250 colonias (neighborhoods), there are only six or so on which to focus your attention. In recent years, the city’s major commercial and financial development has been concentrated in the Santa Fe District, located on the western edge of the city and already considered Latin America’s largest shopping complex. This emerging urban area, comprised mainly of high-rise buildings surrounding a huge shopping mall, is Mexico’s most modern corporate and residential zone, featuring high-end shops, hotels and fine dining.

As such, it has attracted heavy foreign and domestic investment from 3M de México, Black & Decker, Caterpillar, Chase Manhattan, Citibank, Lucent Technologies, Microsoft, Motorola and many other big corporate players. It helps that Santa Fe is a safe area with a desirable location and low pollution. Its amenities attract about 8 million people per year, and that number is expected to grow.

Diversions

Mexico City is considered a cultural capital for good reason. To conjure the size of this vast city, visit the 52nd floor of the soaring Torre Mayor (505 Paseo de la Reforma), Mexico’s newest and Latin America’s highest skyscraper. Constructed with anti-earthquake measures, the 740-foot structure can withstand a quake magnitude of 8.5.

At the Centro Histórico, you can appreciate the many layers of history. Here it all began when in 1325 the Aztecs founded their capital city, Tenochtitlan.This district’s main square, the Zócalo, is the largest in Latin America; worldwide, only Moscow’s Red Square and Beijing’s Tiananmen are larger. Explore the famous Aztec Templo Mayor Museum (8 Seminario, tel 52 55 5542 4943) and the ruins from this once mighty empire. Adjacent to it is a huge archaeological site where the temple’s foundation was accidentally discovered in the 1980s by workmen digging to build the city’s subway. The landmark National Palace (Av. de la Constitución, tel 52 55 5764 8500) contains some of Diego Rivera’s famed murals, as does the lesser-known nearby Ministry of Education (28 República de Argentina). You will need identification to enter.

To experience the city’s vibrant art scene, head to Condessa and Roma, two hip, restored areas that are now the city’s trendiest.Condessa, much like Manhattan’s Soho, is most known for its attractive Art Deco buildings, boutiques and cafés, while Roma has some of the best galleries along with Beaux Arts architecture. Have breakfast at Casa Lamm (99 Alvaro Obregon, tel 52 55 5514 8501) in Roma, a charming early-20th-century mansion transformed into a cultural center. Then head to the nearby galleries, where many of the works of emerging Mexican artists remain affordable. Galleries worth checking out include Galeria OMR (54 Plaza Rio de Janeiro, tel 52 54 55 5207 1080), Garash Galeria (49 Alvaro Obregon, tel 52 55 5207 9858) and Galeria Nina Menocal (93 Zacatecas, tel 52 55 5525 3095).

Afterwards join the artists, business executives and beautiful people for lunch at the popular seafood restaurant, Contramar. Don’t worry about the time; even 4 p.m. is not too late, but be sure to book ahead. Order the fish tacos and the specially prepared whole catch of the day and enjoy the lively local scene.(200 Durango, tel 52 55 5514 3169).

Mexico’s stellar museums are not to be missed. Carlos Slim Helu, one of Mexico’s wealthiest business entrepreneurs, exhibits some of his extensive art collection at his Soumaya Museum (Plaza Loreto, Tizapan, San Angel, tel 52 55 5616 3731) in the southern part of the city. The collection ranges from Rodin and Picasso to local artists Siqueiros and Rivera. To see more of renowned Mexican artists such as Rivera, Kahlo, Orozco, Siqueiro and Tamayo, nothing measures up to the Museum of Modern Art (Paseo de la Reforma and Gandhi, tel 55 5211 8331) in Chapultepec Park.

Info To Go

Benito Juarez International Airport (MEX) is about eight miles from the city. Licensed taxi service is available ($5–25, plus 20 percent surcharge 11 p.m.–6 a.m.). Despite the traffic, the most efficient way to travel from the airport and around the city is by hotel car or a radio taxi; it is not prudent to hail a taxi on the street. Visit www.mexicocity.com.mx.

Just The Facts

Time Zone: GMT -5
Phone Code: 52 Mexico, 55 Mexico City
Entry/Exit Requirements: Passport required for U.S. citizens. Upon arrival, fill out a Migratory Form to be stamped by customs and presented upon departure.
Currency: Peso
Official Language: Spanish. English is often spoken at business meetings.
Key Industries: Government, hotel and restaurant, consumer products, pharmaceuticals, automotive, banking and investment.

Lodging

Hilton Mexico City Reforma
Five-star hotel steps from the main entrance to the historic downtown district. The Wine Bar offers 200 international wines plus a selection of risottos and tapas. Av. Juarez 70, tel 52 55 5130 5300. $$$$

The St. Regis Mexico City
The city’s newest hotel, in the 31-story Torre Libertad, indulges guests with butler service, Remède Spa and 24–hour concierge desk. 439 Paseo de la Reforma, tel 52 55 5533 2969. $$$$

W Mexico City
The trendy hotel features guest bathrooms with a hammock for viewing Chapultepec Park.Lively nightclub attracts jet-setters and international visitors. 252 Campos Eliseos, Polanco, tel 52 55 9138 1800. $$$$

Dining

Stylish, sophisticated Mexican food — nearly impossible to find north of the border — awaits in abundance in Mexico City. Restaurants open around 1:30 p.m. Dinner can begin as late as 10 p.m. Leisurely business breakfasts can easily last two hours, while lunch could end early in the evening.

Aguilla Y Sol
Celebrity chef Martha Ortiz Chapa prepares innovative and refined dishes; don’t miss her shredded duck with Oaxacan mole. 127 Emilio Casstelar, tel 52 55 5281 8354 $$$

Izote
Chef/owner and cookbook author Patricia Quintana serves up Mexican specialties with contemporary flair. Don’t miss the special bread cooked in a wood-fired oven. 513 Presidente Masaryk, Polanco, tel 52 55 5280 1671 $$$

Pujol
Chef Enrique Olvera draws inspiration from his country’s rich heritage with specialties like cocoa-crusted venison and beef short ribs with mole. 254 Petrarca, Polanco, tel 52 55 5545 4111 $$$

Checking In With Marcelo Ebrard
Mayor of Mexico City, D.F.

How Is Mexico City Meeting Its Latest Challenges?

Mexico City’s government is currently addressing a number of economic, social and environmental challenges. We are making major investments in the city’s extensive transportation infrastructure, including construction of a new metro line. We are investing nearly $1 billion a year in environmental initiatives designed to make it one of the most sustainable cities in the world.

How Is The Government Encouraging Foreign Investment?

Mexico City is focusing on creating a knowledge-based economy, with significant investments in infrastructure, technology, science and research, education, healthcare and biotechnology. We are creating partnerships between multinational companies, educational institutions and scientific and research organizations to develop our knowledge economy. The city offers attractive tax, property and labor force incentives for foreign companies to locate in Mexico City, as well as a high quality of life for expat managers.

What Are Your Favorite Places In Mexico City When You Have Free Time?

Every Sunday, Paseo de la Reforma, the elegant boulevard that runs through the center of Mexico City, is closed to car traffic and opened to pedestrians and bicyclists. I enjoy biking throughout the city and, in fact, insist that all of my cabinet join me once a month in biking to and from their government offices.