Investment and financial services giant Wells Fargo called Mexico a “smart investment decision” in a recent article,citing the country’s robust economic growth,booming car export industry and consistently rising level of national productivity.
“Investors who 10 years ago looked beyond the headlines and found merit in the country’s economic fundamentals and enlightened fiscal policies have seen the Mexican Bolsa equity index average a 21.7 percent annual gain during the 2003-2012 decade,” writes Wells Fargo. “Further bolstering the Mexican economy has been an expansion of ‘near-shoring’ with many international manufacturers,particularly automotive companies,seeking shorter supply chains and proximity to the U.S. market.”
Former President Felipe Calderón’s progressive reformist policies have been at least partially responsible for Mexico’s success,while the administration of newly inaugurated Enrique Peña Nieto is already working to further these structural changes. Currently,the focus is on the financial and labor sectors,as well as the state-owned energy sector.
“It could be Mexico’s time to shine again in 2013,” shared Sean Lynch,Global Investment Strategist at Wells Fargo Private Bank.
It is important to note that as oil prices have increased,so has the cost of transporting goods from China to the U.S. and Canada. Combine this with rising wages in China and it’s easy to see why Mexico real estate is attracting major attention – not to mention large amounts of foreign investment dollars – from the world’s largest corporations. In addition,according to the World Bank,automobiles currently account for at least one quarter of Mexico’s total number of exports,which have recently grown by more than 10 percent.
“In the long run,Lynch expects low inflation,rising employment and the growing Mexican consumer base to further fuel growth,” writes Wells Fargo. “Improvements in Mexican productivity are aiding the investment case for multinational corporations.”