For the expert, Mexico is benefiting from the trade conflict that exists between the United States and China, the disruption of supply chains and the war between Russia and Ukraine.
The market forecasts a growth of 2.59% of the GDP for 2023, another of 1.49% for 2024 and an expansion of 2.13% for 2025, according to the latest survey on expectations carried out by the Bank of Mexico.
But other institutions like Valmex and Actinver estimate that this year the Gross Domestic Product (GDP) will grow between 2.9% and 3.2%, respectively.
In 2023, Mexico is already the main trading partner of the United States, with 15.6% of the total sum of exports and imports, followed by Canada, with 15.3%, and China, with 11%.
And the growth of Foreign Direct Investment (FDI) in Mexico grew 6% annually during the first quarter. Will this growth trend persist?
Obstacles to the ‘new Mexican miracle’
The lack of security, the lack of water in some northern states and the lag in energy matters seem to threaten the full use of nearshoring, says Enrique Díaz.
Despite this, investors are expected to make a cost-benefit analysis that transcends even the figure of López Obrador, investing privately in terms of energy and even private security. Since the superior benefit is the proximity to the world’s largest consumer: the United States.
And, on the political issue, Enrique Díaz hopes that the Fourth Transformation project, whoever becomes president in 2024, will not have the same style as López Obrador, because “nobody eats fire.” And, in this sense, the new president should give more facilities to Foreign Direct Investment, in order to give economic results.
The pending tasks are to strengthen the rule of law, so that there are no more expropriations like Constellation Brands. Enrique Díaz’s perspective is that next year Morena will not have an absolute majority in Congress and the Judiciary will continue to be a real counterweight to the Executive, for which reason it is expected that there will be respect for private property in Mexico.
“The winds are favorable for nearshoring, whoever becomes President, even if it’s a person like Claudia Sheinbaum.”
Mexico is not the only option and it is limited
According to a report by Banco Base, Mexico must take advantage of the situation to strengthen the growth trend and attract FDI. “The business relocation opportunity will not last forever. If Mexico does not take advantage of it, there will be other countries that, even though they are geographically far from the United States, such as Vietnam, will be recipients of the companies that have left China in the face of deglobalization and the trade war.”
The increase in vacation days, the increases in the minimum wage and the outsourcing reform have increased the cost of labor in Mexico, which is why it is not in the same conditions as China before its economic takeoff, says the report. .
In addition, “the low level of investment in some subsectors implies that the nearshoring opportunity is being exploited below its potential,” he adds. For example, despite the fact that the computer equipment manufacturing subsector received 8.1% of investment flows, there is a risk that flows will not materialize in the long term. And its growth in the value of exports of 21.5% is explained by the temporary shortage of semiconductors worldwide.
Banco Base agrees that a perception of insecurity and corruption persists, “which has an effect on the costs incurred by companies in the country.”