News, Insights and Best Practices for Manufacturing in Mexico

American investors confident in Mexican economy

25 Mar 2014

Category: Politics & Regulations, Taxes & Finance

Despite challenges to the Mexican economy, the Mexican chief economist, Ernesto Revilla, believes that more data is necessary before changing the finance ministry's forecasted growth of 3.9 percent, according to Reuters.

"It's still too soon to change our forecast," he told Reuters in an interview.

President Enrique Peña Nieto believes that his opening up of the telecommunications sector through loosened regulations, along with breaking the Mexican government's monopoly on the oil industry, will increase growth in Mexico through international investments such as manufacturing in Mexico through offshoring.

"We already have green shoots," Revilla said. "We should see the economy growing in a sustained way in the second quarter...or in the second half of the year."

Mexican consumer confidence has improved recently - the first time in six months - according to Reuters, which may indicate that Mexico is on track to future growth opportunities.

American investors
Whether Mexico becomes an industrial powerhouse in the near future or down the road, it is still an investment worth looking at by American companies that might consider expanding to Mexico.

For example, Phoenix Mayor Greg Stanton recently made his eighth trip to Mexico City in order to promote trade between the two cities, according to Phoenix radio station KTAR-FM.

"I'll have the unique opportunity to meet with the mayor of Mexico City so that I'll have the opportunity to talk about some unique city opportunities between Phoenix and Mexico City," he said.

The mayor cited Mexico's emerging middle class, as well as President Nieto's economic reforms as reasons for more investment in the country.

Stanton has pledged to double Phoenix's exports to Mexico in five years, according to AZ Central. He plans to open his city more to trade this year, as well as hold an international trade summit, and provide services to local U.S. companies that will promote exporting products abroad.

Nearshoring opportunities
Other companies are simply planning to bring their companies to Mexico. Desalitech, a wastewater treatment company, has recently made a deal that will allow it to provide services to Mexico. Desalitech has made a deal with the French water treatment company, Veolia Water Solutions & Technologies, to build treatment facilities in Mexico, according to Boston Business Journal.

"Water shortage and industrial wastewater disposal are among the world's toughest problems, and their impact on industry and agriculture is accelerating with growth," Desalitech CEO Nadav Efraty said in a statement.

Not only companies in wastewater are becoming involved with Mexican nearshoring opportunities. Many manufacturing companies are contacting Mexican shelters to help them transition to Mexico, building factories there to save on money through inexpensive labor and easy transportation to the U.S. and Canada.

 

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