Mexico, like the rest of Latin America, is facing a difficult economic climate. According to estimates from The United Nation's Economic Commission for Latin America and the Caribbean (ECLAC), Mexico's economy will grow at 2.4% in 2015. Latin America as a whole will grow at o.5%. Although Mexico is out-performing the regional average, it is also failing to meet expectations. ECLAC had previously pegged Mexico's economic growth for 2015 at 3 to 3.2%. In a recent meeting with executives from BlackRock in Mexico City, Mexico's president, Enrique Peña Nieto, said, "the government, faced with this global scenario...can't risk or sacrifice our macroeconomic stability." Faced with jittery markets eyeing China's economic problems and an environment of low oil prices, Mexico is caught in a trap. Low oil prices ravage the government's short term budget and also discouraging investment in Mexico's energy sector, a one-two punch knocking the wind out of Mexico's economy. One bright spot for Mexico's economy is (non-oil) exports. According to a report from Ricardo Aceves for FocusEconomics, "Should the U.S. economy continue to recover and the Mexican peso weaken, growth in Mexico’s overseas sales is likely to continue improving in the coming months."
Workers unload cases of Corona beer in Michoacan, Mexico. Photo by N. Parish Flannery. Instagram:... [+]
Mexico's exports are on track to total US$412 billion by the end of the year. Although, like Chile, Colombia, Brazil and Argentina, Mexico has a sizable natural resource sector and has been hurt by falling prices for precious metals and oil, Mexico also benefits from its proximity to the U.S. and its region-leading automotive sector. Toyota, Nissan, Mazda, Ford and GM are all looking to boost their investments in Mexico, a trend that will boost Mexico's long term economic growth outlook but won't offset the drag of low oil prices in the short term.
