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American Industries - Positive economic outlook for Mexico and international companies in Mexico | American Industries
According to a comprehensive report compiled by the German company, Statista, assessing the risks and opportunities for international business, Mexico’s economic future looks promising. As a company specializing in market and consumer data, Statista has a platform containing more than a million statistics from over 22,500 sources and 170 different industries. Using this data on factors ranging from trade to investment, society, infrastructure, consumers, politics and the environment, the report provides a comprehensive and broad overview of the country’s general economic situation and outlook. The report mentions various factors that favor the country’s macroeconomic stability, including the US-China trade relationship, geographic location, a growing domestic market, and trade agreements.
Data shows that Mexico has been one of the primary beneficiaries of the US-China trade war, receiving the highest level of inward FDI flow in 2018 from this country at US $254.7 billion (Singapore followed China with US $77.9 billion, and India with US $42.3 billion). This fact, in addition to its strategic geographic location and the recent implementation of the USMCA have resulted in an increase in export trade flow and exports to the US over the past few years. This trend is expected to continue, contributing to Mexico’s positive economic growth in the future and with a forecasted increase of 2% in real GDP between 2019 and 2024.
The country also has a growing domestic market and a high level of human development, factors which contribute to it earning a relatively low operational risk score of 53.0 (up from 50.8). Inflation is also expected to decrease from 2019 to 2021, and the unemployment rate of 3.3% in 2019 is projected to be at 3.2% in 2025. The population grew by 1.1% to a total of 127.6 million in 2019, number which is projected to reach 149.8 million by 2040.
In terms of the Human Development Index, which measures key dimensions of human development such as living a long and healthy life, education, and having an acceptable standard of living, Mexico rates relatively well. This index was created to highlight the fact that people and their abilities play a key role in assessing a country’s development, and that economic growth is not the only factor to consider.
This is reflected in Mexico’s well-developed retail market, widespread use of the internet and mobile subscriptions, and growing eCommerce industry. National consumers are mostly interested in clothing and shoes, followed by consumer electronics, with 60.4% of people using the internet and 96.4 people out of 100 having a mobile phone subscription. In 2019 eCommerce generated US $14.3 billion, the highest ever in digital revenues, with the top stores being Amazon, Apple and Liverpool. These revenues are expected to have an average annual growth of 8.9% by 2024, contributing to an estimated total Financial Tech transaction value growth of 17.6% between 2019 and 2024.
Overall, data from the report is encouraging for companies looking to start up business in Mexico as it reflects an overall stability and promising outlook for future economic growth in a variety of industries, including automotive manufacturing Mexico and Mexico manufacturing in general.
By Isaías Rivera | Mkt & Business Development Director | American Industries Group®
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