Economic trends and business opportunities in Mexico
Mexico is an open economy and country data shows it has the potential to be more than just that. The country actually prides itself in several strong industry sectors that can benefit anyone in the world. Here are some of the strengths of the economy that has managed to drive business opportunities in Mexico:
Open economy that continues to forge new partnerships
Mexico is a free market economy with several key sectors. The openness of the economy is mainly because of the free trade agreements it has engaged in.
North american free trade agreement (NAFTA)
The NAFTA region composed of the U.S., Canada, and Mexico is quite the success story. It is because of the extensive trade between these three countries why exports of each country has grown.
Pacific alliance (PA)
Mexico is one of the four founding members of the PA. The PA is an economic trade bloc that seeks to remove barriers in trade between member states (Chile, Colombia, Mexico, Peru).
The goals of the PA are the following:
- Free trade and economic integration among member states
- Free flow of human capital
- Joint stock exchange
- Leveraging each other for common diplomatic representation and joint investment promotion
Trans-pacific partnership (TPP)
The TPP is an ongoing free trade agreement which aims to enhance trade and investment among the TPP countries, promote innovation, economic growth and development, as well as support the creation and retention of jobs.
Due to free trade, the manufacturing supply chain in Mexico has greatly improved. This is supported by a young, productive, and affordable labor force. This shows in a number of sectors:
Exports of aerospace in Mexico have increased. Manufacturing facilities have also been established in Mexico.
However, without a strong domestic supporting industry for the aerospace sector, opportunities in complex machining and surface treatment will still be present.
In 2014, Mexico exported 2.7 million units consisting of 124 k of heavy vehicles and 2.6 units of light vehicles. in the same year, there were 33 OEMs and plus 800 automobile parts and components companies established in Mexico. Over a period of 5 years, (from 2010 to 2014), Mexico’s vehicle production rate overtook that of the US and Canada. Today Mexico stands in 7th position worldwide in vehicle production.
Strong industry players such as Ford, Toyota, Honda, Renault, Nissan Daimler, BMW, Volkswagen and many others have manufacturing facilities in Mexico, mainly in the north and central regions.
Mexico is considered as one of the biggest producers of oil in the whole world. Daily crude oil production reaches up 2.5 million barrels. Regardless of this though, there has been a decline in the production since 2004 and this has been a cause for concern.
Because oil prices are at an all-time high, this will spark motivation for people to exploit oil reserves more. A concrete example for this would be PEMEX, the 8th largest oil and gas company in the world. The company has overtaken other leading foreign companies. Heavy crude oil supply remains to be an important aspect in the global economy. The country ranks 9th in crude oil reserves, and 4th in natural gas reserves.
Public companies operating in the Mexican energy sector employed almost 250,000 workers in 2013.
Hence, Mexico holds great potential for investment mainly in its auto and energy sectors. Its free trade environment makes it inviting while its production and labor potential establishes dependability. For in-depth market research on Mexico’s budding industries, it would be helpful to take assistance from informed professionals to assist your entry into this dynamic country.