Following up to our January’s newsletter, several articles on various leading publications have been confirming what we were informing then: Mexico is back as a strong alternative for those companies pursuing new markets or looking for additional manufacturing capabilities.

Mexico’s new administration is vigorously moving forward fundamental reforms to Mexico’s tax, labor, education and possibly energy sector and these reforms will certainly provide us with positive material to keep you inform of Mexico’s impressive economic performance.

Despite that the main economies around the world have slowed down its economic growth, Mexico has steadily growing, maintaining a low unemployment rate as well as keeping trade with its main partners.

The Globe and Mail

“High unemployment, slow growth and crippling debt are common themes in many industrialized countries around the world, but not in Mexico. The unemployment rate in Latin America’s second largest economy has fallen to its lowest level in more than four years, at 4.5 percent. Economic growth is outperforming most other countries and the stock market is hitting records high. A solid jobs market and stable economy is bolstering the country’s middle class. But it could also carry benefits to Canada too. Mexico is Canada’s fifth largest destination for exports and many Canadians firms are setting their sights on Mexico, betting prospects will keep improving.
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Trade between Canada and Mexico grew 8 percent between 2002 and 2011 (at compound annual growth rates), and EDC expects growth to continue. Mexico’s large population, at 112 million and upbeat economic prospects ‘will have positive effects on their demand for Canadian products as well as open business opportunities for Canadian companies looking at doing business in that market’ the agency said. The country’s economy is expected to expand 3.5 percent this year – a little less than last year but still stronger than projected rates for Canada, the United States and much of Latin America.

‘While much of the world’s economies, such as China and Brazil, slid in a slowdown last summer, Mexico was a rare and notable exception, generating remarkably smooth growth,’ said Mr. Peter Hall, chief economist at Export Development Bank in a note.”

By: Tavia Grant – The Globe and Mail
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Another thing that should be pointed out is the great number of Free Trade Agreements that Mexico has currently in place, which are 12 with 44 countries, and advantage that allows companies therein to have access to more markets than any other country.

The New York Times

“Mexico has signed 44 (sic) free trade agreements – more than any country in the world – which according to the Financial Times is more than twice as China and four times more than Brazil. Mexico has also greatly increased the number of engineers and skilled laborers graduating from its schools. Put all that together with a massive natural gas finds and rising wage and transportation costs in China, and it is not surprise that Mexico now is taking manufacturing market share back from Asia and attracting more global investment than ever in autos, aerospace and household goods.
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’Today, Mexico exports more manufactured products than the rest of Latin America put together.’ The Financial Times reported on Sept. 19, 2012. Chrysler, for example, is using Mexico as base to supply some of its Fiat 500s to the Chinese market.

…Better integration of Mexico’s manufacturing and innovation prowess into America is a win-win situation, because it makes U.S. [and Canadian too, sic] companies more profitable and competitive, so they can expand at home and abroad.”
By: Thomas L. Friedman – The New York Times
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Consequently, investors have in the last months decided to put their money in Mexico in larger quantities than in other countries of the region.

The Financial Times

“Foreign investors have poured money in. During the first nine months of 2012, they funneled $57bn into Mexican stock and bonds, more than five times the amount they invested in Brazil during the same period.”

By: Adam Thompson- The Financial Times
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Mexico seems to be back on track, regaining its 1st place as an the best option for those companies interested in both, expanding their markets as well as setting up additional manufacturing capabilities.

At Solorzano Corporation we continue to be attentive to bring you current and relevant information on the markets we follow closely, Mexico and Colombia. We also continue to be committed to assisting you with all your needs in those two markets.