News, Insights and Best Practices for Manufacturing in Mexico

Billionaire Carlos Slim believes Mexico will grow in 2015

15 Jul 2014

Category: Labor & Economics

Carlos Slim, one of the richest men in the world and owner of telecom company America Móvil, among many other investments, believes Mexico's economy will increase at a faster pace of expansion in the next year after two years of slow growth, according to CNBC.

"Last year (growth) was low, I think that this year it will be relatively low too, but I think next year will be much better,'' Slim told Reuters in an interview. "I hope that next year we will set the pace for growth for the next four years.''

Slim said many of the issues with the economy in Mexico currently have to do with a lack of investment in areas like energy, infrastructure and roads. All three of these areas are being addressed by Mexican President Enrique Peña Nieto, who recently opened the energy sector to investment from foreign countries. President Nieto has also put money toward improving Mexico's infrastructure.

Currently Mexico's gross domestic product per capita is $10,600, but that number is growing quickly.

"When a country breaks the $14,000, $15,000 per capita barrier, it's hard for it to go back to underdevelopment again,'' he said. "I think we're very close.''

Mexico doing everything in its power to promote economic growth
The central bank of Mexico decided on July 11 to continue holding its interest rates at a record low number, according to Bloomberg, in part to help foster the growth that Slim predicted for Mexico. The interest rate stands at 3 percent after the bank surprised many investors by reducing borrowing costs by 50 basis points in June.

The bank has already cut interest rates four times since March 2013. Alonso Cervera, chief Latin America economist at Creduit Suisse Group AG, reported that he had not expected the bank to raise or lower the interest rates and was not surprised it kept the rates the same. He also predicted that the bank would raise rates in the second half of 2015.

Growth has so far improved in Mexico since the interest rate reduction in June. The country's exports have improved since the beginning of the year, though this might also be due to the unusually cold weather experienced in the U.S., Mexico's biggest trading partner.

Economists predict Mexico's economy will grow by 2.8 percent this year, and they expect growth to accelerate to 3.8 percent in 2015.

Expansion in Mexico
Currently, inflation in Mexico has increased to 3.75, which is a good pace for a developing country. Manufacturing production also increased by 3.6 percent in May year over year. Industrial production increased by 1.6 percent year over year.

MNI news group also reported on the country's industrial growth, jumping 1.6 percent, year over year, and that it was primarily driven by the boost to the Mexican manufacturing industry.

According to Barrons, Mexico's industrial production, while good, was below expectations. However, it reported that Barclays, an investing company, remains bullish on Mexico.

"This report continues to support our 2014 3.0 percent year over year GDP forecast," Barclays reported in a statement. "After this print, we now expect the GDP proxy of May to increase 0.1 percent month over month sa, setting our Q2 GDP tracker at 5.1% quarter-over-quarter saar, slightly below our forecast (6.0 percent)."

Taking advantage of the current economy and expanding to Mexico
Those who wish to get a head start on Mexico's potential growth in 2015 should start looking for a Mexico shelter company now. A shelter company will help businesses move to Mexico by cutting through the red tape that comes with expanding across country lines, and also help with finding a place to set up a factory. Much of the work behind a successful move to an offshore company requires experienced professionals who know a great deal about the country being transitioned to. This is exactly the role of a shelter company.

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