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Mexico’s Economy: Exceeding Expectations

19 March, 2014

Numbers don’t lie,and when it comes to Mexico’s economy,the growth this year speaks for itself. Exceeding all expectations,Mexico is on the way to joining the world’s 10 largest economies and GDP estimates for 2012 have already increased several times this year.

Wall Street Journal: Mexico’s GDP Exceeds Expectations

The first quarter of 2012 saw Mexico’s economic growth accelerating at a rate that exceeded analyst expectations,according to the Wall Street Journal. Compared to the first quarter of 2011,the nation’s first quarter GDP was up 4.6 percent,with industrial production up 4.5 percent,the service industry up 5 percent and agricultural production up by an impressive 6.8 percent.

“Mexico’s economy remains on a path of steady expansion supported by job creation,positive real wage gains,steady external demand and solid consumer credit flows,” Goldman Sachs economist Alberto Ramos told the Wall Street Journal. “The solid real business cycle dynamics,with balanced contributions from both domestic and external facing sectors,implies that there is no immediate need to add monetary support to demand.”

Citigroup: Mexico to Join World’s 10 Largest Economies

Thanks to its stability and growth,Mexico is poised to become one of the world’s 10 largest economies by 2030,according to a recent statement by Renato Grandmont,executive director and chief investment officer of the Department of Wealth Management Latin America for Citigroup. Mexico is expected to take this position regardless of whether or not planned structural reforms are actually carried out,thanks in large part to the country’s solid foundation. This has made it attractive to investments,both domestic and foreign,throughout the recent economic crisis and will keep Mexico growing at a steady pace throughout 2012 and 2013.

In the current climate of economic uncertainty for global leaders,emerging nations could see substantial economic growth,with a combined GDP of at least 5.2 percent. Part of the reason for this growth is the lack of substantial debt,compared to countries like Japan,which has around $12.6 trillion in debt,the U.S.,which is carrying around 11.6 trillion in debt,and Italy,which is in third place at around $2.6 trillion in debt.

NY Times: Mexico’s Economy Outperforms Brazil

The New York Times reported this June that Mexico’s economy is set to outpace Brazil’s in 2012,with no signs of slowing down in the years ahead.

“Mexican factories are exporting record quantities of televisions,cars,computers and appliances,replacing some Chinese imports in the United States and fueling expansion. Mexico’s economy underlies the glossy veneer on display. In contrast to the widening crisis in the euro zone,Mexico can point to 17 years of macroeconomic stability,low inflation,manageable debt,an open economy and increasing competitiveness. And there are encouraging signs for the years ahead. Nissan,Mazda and Honda all announced that they would build new plants in Mexico,and new investments in aerospace and electronics are also on the horizon.”

Mexico is Open For Business

Staying away from Mexico is a “big mistake,” for investors,as this emerging manufacturing and industrial superpower proves that it has the ability to make serious money for investors. 80 percent of Mexico’s exports (which hit a record high in April of 2012) are manufactured goods and trade represents an impressive 60 percent of the nation’s GDP,which is a number that has more than tripled since 1980.

“America,Europe,Japan,South Korea and yes,even China,are falling over each other to invest in Mexican production facilities. One example is the recent opening of Italian tire maker Pirelli’s first ever plant in Mexico,which ties in with the country’s auto production,which was up 20 percent in April year-over-year. Also,Mexico has a major geographical edge next to two huge markets and as a Pacific Rim country,ready to access Asia-Pacific markets.”

Investor’s Business Daily: Mexico Offers Greater Value than China

Mexico now offers much greater value in terms of wage advantage than China,which has driven its economic growth in recent months. In fact,according the Boston Consulting Group,Mexico’s wage advantage will hit an impressive $1.75 by as early as 2015,an impressive margin that will serve to attract even more foreign direct investment.

“Fast-rising Chinese labor costs are prompting companies to reshore production back to Mexico and the U.S.,where transportation and other logistical costs are lower,” writes Investor’s Business Daily. “Mexico is going to be a big winner in reshoring.”

Forbes: Mexico Could Overtake Brazil by 2022

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.

Oh,and one more thing…

Tulum will be the site of the new Riviera Maya International Airport,which is expected to handle at least 3 million visitors in its first year of operation. Its construction will undoubtedly provide a tremendous boost for real estate prices in the area,making the region more accessible than ever for travelers from around the world. Cancun’s airport is literally at the bursting point,with more than 190 flights per day from 47 countries,including 211 flights each week from the UK alone.

The new Riviera Maya airport will detonate economic development in and around Tulum. Planned for opening during the first half of 2014,the airport will also dramatically reduce transfer times from Cancun and Cozumel – and it doesn’t take a genius to imagine what this will mean for real estate and the region’s economy!

At Investment Properties Mexico we are experts at creating Real Estate Retirement Accounts. We help more investors set up self-directed retirement accounts than any other company in Mexico. We are familiar with all of the laws and regulations on both sides of the border,so if you previously thought that you didn’t have enough money for the down payment on a Mexico real estate opportunity,now is the time to act! The funds could be sitting in your IRA or other retirement account losing ground each month,or you could give us a call and we can show you how to start investing in Mexico so you can watch your portfolio grow!

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