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The might of Mexico

By Duncan Catanach

As I watch the world ride the storm of the global economic crisis, I can see the real opportunity that the Mexican market offers New Zealand. Too often the perception of Mexico is one of poverty, unrest, under-educated people and drug wars. But if you look at the fundamentals, the nation’s prosperity and potential will impress you.

Mexico's land mass is more than seven times that of New Zealand and it has more than 25 times as many people. You've heard a lot about the promise of 'BRIC' (Brazil, Russia, India, China) countries, but Mexico's 113 million citizens are richer than those of Brazil, India or China.

Its robust trade agreements allow it to do more trade than Argentina and Brazil combined. Mexico’s economy is the second largest in Latin America and by 2050 it’s projected to become the 5th largest economy in the world. GDP growth has been strong (5.5 percent last year) and inflation modest (3.3 percent as of June). The upward momentum is reflected in economic mobility with most Mexicans now belonging to the growing middle and upper classes.

Mexico is an ideal springboard into the United States (US) and Latin American markets. With annual trade with the US approaching half a billion dollars, more companies from around the world are setting up shop here. The World Bank says Mexico is the easiest country in which to do business in Latin America. A business can be registered in a matter of days and the US is a couple of hours away.

All of this means foreign direct investment (FDI) is soaring. EMid Digest predicts FDI will hit US$20B this year. Much of that money is going to industries in which New Zealand companies excel: aviation, automotive, retail sales, security, infrastructure and clean technology.

But if you only think of Mexicans as a workforce, you’re missing much of the potential. They’re also energised consumers who provide the economic fuel for this trillion-dollar, free-market economy. Among other factors, rising wages in China have driven new jobs here, translating into more spending money for Mexican consumers.