According to Forbes,Mexico is quickly becoming the country of the future; a title once held by Brazil. Although many fund managers and investors have trouble looking too far into the future,Nomura Securities in New York is predicting that Mexico’s economy will overtake Brazil by the year 2022.
If this turns out to be true,those who put their money to work now,before the entire world discovers what Mexico has to offer,stand to profit greatly from the country’s growth.
“These days,investors are in love with Mexico,” writes Forbes. “Mexico’s economy might be even bigger than Brazil’s within 10 years.”
And it is important to note that this prediction is not coming from the Mexican government. Instead,it’s coming from Tony Volpon,who is managing director of Nomura Securities. This is made even more significant by the fact that Volpon is actually from Brazil,so he has intimate knowledge of the country.
Although Brazil and Mexico experienced similar growth during the 1990s and until 2004,this is where their story diverged and Brazil’s economy grew by leaps and bounds,mainly due to China’s new role in the world market. Mexico,meanwhile,was number three with respect to US imports behind Canada,but that has already changed. Today,Mexico produces more cars for the US than Canada and has undergone a series of positive reforms to make it even more competitive.
Mexico has privatized the banking sector and floated the exchange rate,and as labor costs continue to rise in China,more and more countries are choosing Mexico,which has cheap labor and an excellent geographical location near the US.
“The type of manufacturing Mexico is attracting is the value-added type,” writes Forbes. “Like Aerospace,for example,which of course is very high cost and human capital intensive.”
Brazil’s economy is currently growing at just 2 percent this year,with Mexico poised to overtake it by a significant margin with predictions that it could grow upwards of 4 percent by the end of 2012.