Emerging Markets – Opportunities & Threats: Mexico
by Sterling J. Scott, Marketing Communications Coordinator, MHI | @mhi_sterling
Opportunities
Mexico’s economy recovered well after the economic crisis of 2008, growing over 4% on average and GDP per capita increasing annually at 3% on average. The Institute of International Finance projects growth to increase by 3.5% this year and 4.5% in 2015. Mexico’s economic growth has outpaced those of the United States, Canada, and even Brazil as the country has benefited from the increasing costs of labor and transportation in China, which have made Mexican manufacturing more competitive.
Population growth has been constant at 1.2%. Mexico’s economy is also poised to profit from the recent overhaul of public policies related to the oil and gas industry, in addition to its telecommunications systems.
The country has become more attractive for investors, even more than Brazil. Moody’s and Standard & Poor’s, the two largest credit rating agencies, rated Mexico higher than Brazil in early 2014. Mexico’s manufacturing growth has led to the emergence and growth of a strong middle class, meaning more consumers and more opportunities for businesses to grow.
Threats
Corruption poses the greatest risk in Mexico. This is particularly problematic because consumer demand for supply chain transparency is increasing. Whether bribes or vendor fraud, corruption can be damaging to consumer perception while also being very costly to businesses financially. A prominent U.S.-based retailer is currently under investigation by the Department of Justice for allegedly spending $24 million on bribes and $16 million on local governments to expedite store expansions in the area.
Conclusion
Mexico boasts the fastest growing economy in North America and as an emerging market, has even outpaced the economic powerhouse that is Brazil. The country’s strong manufacturing growth has led to a growing middle class and opportunities for investors. Click here to learn more.
More information on supply chain trends, recommended strategy, and innovations that drive supply chains are available in the 2014 MHI Annual Industry Report which can be downloaded at www.mhi.org.
