Bloomberg Businessweek recently reported that Mexico attracted an impressive $19.4 billion in foreign direct investment money in recent years,a number that is projected to increase dramatically in coming years.
These momentous numbers are thanks in large part to the Mexican government’s continued efforts to work with investors and large corporations that are headquartered around the world. The efforts have paid off. The European Union is currently coming in as Mexico’s third largest trading partner,with more than $50 billion in trade each year.
“Mexico has come to be seen as an attractive investment option for multinational companies looking to diversify and globalize their operations,” stated Forbes magazine.
Rising Business & Foreign Investment Capital in Mexico
Mexico has made important strides in opening up to foreign investment capital in recent years by reducing tariffs on imports and exports,which allows corporations to make a larger profit on goods that are manufactured here. In addition,the government has opened up public services to private companies,and has worked to establish important trade agreements with other Latin and South American Countries. In addition,according to the country’s German ambassador,Francisco Gonzalez Diaz,Germany is planning to invest more than $3.3 billion in Mexico throughout 2013 and beyond,mainly in the aeronautics,automotive,chemical,pharmaceutical,and metal-mechanics sectors.
“Large investment groups of French,Germans and Koreans,among others,are looking to Mexico as a market opportunity,not only for this country,but to reach out to other nations of Latin America,” stated Pierre Lellouche,French Minister of the Economy,Finance and Industry.
One of the main reasons behind Mexico’s growing appeal for global investors is also due to its increased competitiveness as a production center,thanks to a structural decrease in the exchange rate and improvements in the country’s exports manufacturing industry.
“Mexico has a productive capacity sustained by low operating costs arising from their geographical location,low wage levels,recent investments,and the advantages of the North American Free Trade Agreement (NAFTA),which makes it very efficient for industry worldwide,” stated Banamex-Accival analysts.
The fact that many major manufacturers have been pulling out of China recently is also good news for Mexico,which still offers a low-cost environment for manufacturers. China’s rising minimum wage and stronger currency means it can no longer offer the enormous bargains of yesteryear,which has increased the appeal of Mexico worldwide. For the first time in recent history,it is cheaper to manufacture in Mexico than China for companies targeting the U.S. market. Also,since it takes only five days to ship from Mexico to Canada,compared to 46 days from China to Canada,companies can save time and money on shipping costs.
Looking to the future,Goldman Sachs has predicted that Mexico’s rapidly advancing infrastructure,growing middle class and swift decline in poverty rates will create a higher GDP per capita than all but three European countries by the year 2050.
NASDAQ has also chimed in,calling Mexico “one of the world’s largest developing economies,” in response to the fact that it is already larger than the economies of China,India and Brazil. Furthermore,the UK is currently one of Mexico’s biggest investors,and the UK Trade & Investment has announced that it expects Mexico’s economy to surpass the UK’s by the year 2040. All of this could explain why a report last year by the Financial Times compared Mexico’s current economic state to that of Spain 20 years ago.
Finally,tourism has long provided a boost for Mexico’s economy; a trend that promises to continue throughout 2013 and beyond.
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!
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