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Reuters Reports: Mexico's Economy Still Going Strong

13 September, 2012

According to recent reports by Reuters, Mexico's economy is still on the upswing, with a reported 2.2 percent increase in gross fixed investment during January 2011 alone, and a GDP growth forecast at 4.3 percent. The finance ministry and President Felipe Calderon raised the GDP forecast for the second time this month, stating at a banking conference in Acapulco,"The original forecast... was 3.8 percent for 2011. Today the finance ministry is adjusting its forecast to 4.3 percent for the year." Earlier this month the finance ministry raised growth expectations to 4.0. 

Mexico's continued economic strength is due in part to the recovery of the US economy, which is bolstering activity south of the border. In fact, the national statistics agency stated that the country's gross fixed investment is up an impressive 9.2 percent on the year, proving the continued strength of Mexico's economy. This increase is largely due to new spending on equipment and machinery relating to new construction. 

The new GDP figures are also closer to what top economic analysts have been forecasting for Mexico in 2011, who according to a poll by the central bank believe it will actually hit 4.25 percent. The finance ministry decided to raise its projection due to growing demand from external as well as internal sources, combined with higher economic output figures in January 2011 compared to one year earlier. 

In other good news for Mexico's economy, the inflation rate slowed much more than predicted and is currently at its lowest point in almost five years, prompting finance minister Ernesto Cordero to state at the Reuters Latin American Investment summit that economic growth in Mexico could potentially exceed the 2010 all-time high of 5.5 percent. Currently, the central bank is expecting economic expansion in 2011 to hit at least 5 percent. These factors are encouraging and indicate Mexico's continued recovery from the recent worldwide economic downturn and why investors keep returning to invest in Mexico.

Topics: Economy Mexico