News, Insights and Best Practices for Manufacturing in Mexico

Signs indicate Mexico's economy will grow soon

30 May 2014

Category: Labor & Economics

Mexico's slow growth in the first quarter led many experts to initially write off the year as a bad one, but now that exports are picking up, some analysts believe that Mexico could gain momentum, according to economics publication Zacks. As a further indicator that Mexico might be moving into an expansionary phase, Pemex, Mexico's state-owned oil and natural gas company, has posted its highest gas output in the last four years, according to the Latin American Herald Tribune

Mexico and its future
According to Zacks, the Mexican government has been funding many improvements to the Mexican infrastructure - one way that Mexico boosts its growth.. It plans to spend a total of $587 billion on transportation networks by 2018.

Additionally, the U.S. has seen economic improvements, and generally the two countries' economic growth run in tandem. When the U.S. does well, then Mexico can export more products and make more money. Zacks cited that Mexico reported a trade surplus of $510 million in April, which is a very good sign of expansion.

A third indicator of growth is that Mexico has been expanding its energy sector to include foreign investors, according to the source. Pemex has been at the forefront of encouraging foreign companies to begin buying shale fields and other sites that require expertise the Mexican company doesn't have but that foreign companies do. The government of Singapore is one example that Zacks included as an interested party.

As a sign that Pemex is growing stronger and becoming a better company, it has recently produced its highest gasoline output in four years. The  company produced 479,000 barrels per day of gas in April. As a result, its imports of gasoline have fallen year over year. It also produced 334,000 bpd of diesel in April, which is another record - the highest output in nine months.

Pemex has sold a total of 772,000 bpd in the past four months, 17 percent of which is premium gasoline, and 83 percent of which is regular gasoline.

U.S. companies are taking notice
Manufacturing firms in the U.S. have begun moving to Mexico in rapid numbers, part of a nearshoring trend in which companies move their manufacturing sites closer to the U.S. where it is faster and cheaper to export goods to North America.

One such company that taken the first step to nearshoring is Greatbatch Inc., a medical device company, which has begun transferring some of its operations to a newly built plant in Tijuana, according to Plastics Today.


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