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Mexico: The Next BRIC Economy?

12 September, 2012

In 2001,Jim O’Neil,resident business guru at Goldman Sachs,coined the
term BRIC Economy,referring to explosive economies of emerging countries such
as Brazil,Russia,India,and China. By 2050,the combined economies of these 4
countries are projected to eclipse the cumulative economies of the current
richest countries of the world.

However,O’Neil,for all of his brilliant
insight,may have inadvertently overlooked the burgeoning economy just below the
border. If stories of drug violence,illegal immigration,swine flu are making
you hesitate about investing in
,then you should seriously take a closer look.

Quickest Recovery Rate Out of

According to Moody’s Latin America,Mexico is racing out
of the recession,recording a 4.3% growth rate (faster than the U.S.) thus far
in 2010 and a 10% trough-to-peak increase which bests almost every other economy
worldwide. Moody’s expects this growth to continue.

Strongest Currency Against the Dollar

Mexico got an even bigger boost from Bloomberg this month when
they reported the peso has gained 7.5% against the dollar so far this year,
beating out every other major currency. The peso is expected to grow another 11%
by the end of 2010.

Lowest Business Tax
in the World

A KPMG study recently found that Mexico boasts the
lowest business tax rate in the world,out of 10 major countries and 95 cities.
Property taxes,at 1% annually,are minuscule in Mexico. For example,on a 500k
USD property,you would only pay $500 in annual property tax. Capital gains
taxes in Mexico also have their advantages. In fact,capital gains tax on
property appreciation can be exempted if you can simply show that you use the
property 6 months out of the year.

Unemployment WorldWide

Fox Business News reported this year that
Mexico’s unemployment performance is now stronger than any other economy on the
globe except South Korea and the Netherlands. At 5.1%,down from 5.4% only a
month ago,Mexico easily beat out the U.S. (9.9%),Canada (8.1%) and China

Fastest Growing Real Estate
Market in the Americas

That could explain why development in Mexico real estate
is far outpacing growth in other countries. One of the hottest spots in the
Mexican economy is the coastal real estate market,expected to grow faster than
any segment in the Americas and Internationally. For example,Playa del Carmen,
located in the heart of Mexico’s Caribbean coast,was recently named the fastest
growing area in the world by Guinness Book of World Records and the town of
Tulum,just to the south,is poised to grow exponentially faster.

over 18,000 American companies are investing and operating in Mexico and 1
million Americans now live,work,invest and retire South of the Border,more
than any other single place in the world. This number is expected to quadruple
in the next decade as an aging America finds itself with over 100 million
citizens above the age of of 50. They are looking for a cheaper place to retire
that offers good healthcare at a lower cost and a warm tranquil lifestyle. With
the recent BP oil disaster in the Gulf,Mexico may be the perfect place for
these would-be retirees.

Another BRIC in
the Wall

What is the lesson here for Jim O’Neil and other BRIC
advocates? Don’t underestimate the investment potential of the economy just
south of the boarder. Sometimes the greatest opportunities are found right at
your doorstep and Mexico may be the biggest BRIC yet!

by Michael


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