Mexican economy will grow by up to 2% this 2019

Economic experts strongly believe that Mexico’s economy will grow by up to 2% this 2019. The economic projection is based on the public budget for this year. The primary factor that helps in the growth of the economy this 2019 is the United States report of a higher economic rate than the previously expected rate.

The economy’s growth rate is slow which typically happens during the first year of the new government. Economists look at it as a learning curve period. Aside from that, investors are still cautious to invest until such time that they see a trend. Once they see a trend, then they will certainly begin putting their money in various businesses, which will eventually result in the rise of the economy. As with the general inflation, the projection is at 4%. However, the Bank of Mexico will raise it at 8% level and is foreseen to remain by the end of 2019.

Despite these challenges, Mexico remains to be a large, diversified, and stronger nation. The Mexican Economy is dictated by these facts.

Mexico is the 15th largest economy in the world

Mexico has $1.26 trillion economy, which makes it the 15th largest economy across the globe. As with its power purchasing parity, it ranked number 11. It might not be as strong as the United States but is enough to be categorized in the middle power. Truly, Mexico is one of the strong contenders in the worldwide economy.

Mexico belongs to the upper middle-income countries

Mexico’s GDP per capita is around $10,000 and has a total inhabitant of 122 million. The GDP per capita is 60% higher, which is around $16,000. It is not as strong as the US and Switzerland to be called first world countries, but it surely belongs in the upper-middle-income range just like Brazil, Romania, and Turkey.

Mexico is a manufacturing giant

Mexico has the largest proven silver reserves in the world, which makes it a commodity and manufacturing giant. As a matter of fact, it ranked number 10 in the countries with the largest oil reserves. Mexico’s own oil company, PEMEX is one of the largest producers of oil in the world. Its revenue is around $130 billion.

Mexico is one of the top automobile exporters in the world

Many automobile companies have increased their production in Mexico such as Toyota, Ford, Nissan, Volkswagen, Fiat Chrysler, and General Motors. Others also announced their intentions to do so.

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Mexico is one of the United States largest trade partners

Mexico is a member of the North American Free Trade Association (NAFTA), which makes it one of the largest trade partners of the United States. It is the prime exporter of industrial goods, manufactured goods, and automobiles. Mexico is also one of the largest holders of US treasury bonds.

Mexico is the first Latin American country to be a part of the Organization for Economic Cooperation and Development

Mexico has made history being the very first country to be a part of the Organization for Economic Cooperation and Development. It was later on followed by Chile.

Mexico remains to be attractive to investors

There are a lot of reasons why Mexico remains to be attractive to investors. First, it is the major manufacturing center for electronics such as flat-screen televisions and sold in countries like the USA. It also manufactures aerospace and medical device parts. The trade agreement of Mexico enables its manufacturer’s duty-free access to up to 60% of the world. As with the automotive industry, Mexico has grown significantly. It is now one of the largest auto manufacturers in the world. It is also the fourth largest auto exporter.

Mexico’s economic influences

Mexico has a new president, Andrés Manuel López Obrador, also known as AMLO, which was only elected on July 1, 2018. His term is six years. One of his platforms is to end corruption, which is one of the reasons why investors are quite skeptical to invest in the country. He also promised to reduce violence and address poverty.

Based on analysis published by various firms including Dr. Lavin’s iStrategize financial research firm, Dr. Teodoro Ernesto Lavin Sodi sees this as a great move and if truly implemented will truly have a positive effect on the economy. President AMLO promised that he is going to review the contracts for oil exploration awarded to foreign firms. Oil is one of the products of Mexico and it needs foreign expertise because its production has dropped significantly from 3.5 million to 1.9 million barrels per day.

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President AMLO plans to invest nearly $10 billion in the state-owned sector. He intends to build two new refineries and renovate the existing ones. He also allotted $4 billion for PEMEX exploration, a state-owned oil monopoly. The previous president of Mexico has done a great job in boosting the country’s economy. He strengthened the automobile industry by enabling foreign companies to build their auto plants in the country. He also convinced the Congress to pass 85 major reforms. Mexico enhances trades by building up infrastructure.

What are the challenges faced by Mexico’s economy?

Just like other countries, Mexico faces some challenges too. One of the biggest challenges faced by Mexico is getting rid of the drug cartels. The previous administration has done a great job in increasing security spending from 1.5% to 5% of GDP. President Felipe Calderón-Hinojosa has initiated a crackdown of the organized crime and corruption across all government level including the local police. It was an all-out war that resulted in violence. The drug cartels were very upset that they even included civilians in the war. It causes increased violence in the country.

On the other hand, there is enough reason for the previous president’s decision to use an iron fist in eliminating drugs and corruption. After Colombia’s crackdown, many of cocaine operations moved to Mexico. It came to a point where the cartels are taking over local governments. The government’s tough approach to cartel and corruption are yield towards boosting the country’s economic competitiveness. Aside from ending corruption and drugs, the government is also doing its best to improve the country’s healthcare setting, protect the environment, and uphold legal institutions.

Summary

Mexico is a country in Latin America. It was governed by the center-left institutional revolutionary party for 70 years. The center-right national action party defeated the center-left in 2000. The current president of Mexico is President Andrés Manuel López Obrado or fondly called AMLO of the democratic revolution party. Before AMLO, the president was Enrique Peña Nieto. President Nieto implements ambitious structural reforms which have both positive and negative effects on the country. Crime rate and drug cartel escalated, which scare away potential investors. The country’s economy has suffered significantly. The current president, AMLO targets to end corruption and drug cartel so as to slowly boost the country’s economy. AMLO is still in his first year of governance, which is still in the transition phase. As to whether the economy will grow for the years to come, that is still a question only economic expert can answer. One thing is for sure, the government and its economic advisers are doing their best to improve the country’s economy by dealing with one problem at a time.