Fiscal Pundits Have Postive Outlook on Mexico's Economic Future
Designing a product or service for the global marketplace is a complicated task. For international businesses, it’s important to consider the risks and challenges of balancing the demands of multiple countries and a disparate consumer base.
Mexico has been a major producer of global goods and products. Recent growth in the North American nation has many people optimistic about what the future holds.
Economy gains ground in 2014
These economic gains could be a very good sign for businesses, both those currently with operations in Mexico or planning on expanding in the coming months. Recently, one of the nation's central bank's deputy governors - Manuel Sanchez - spoke with Reuters about the changing conditions in his country.
"It seems that the economy is on a path of very, very gradual improvement, still very preliminary," he told the media outlet.
The gains this year are likely due to several factors, including higher domestic consumption, lower interest rates and stronger investment activity in the country, Reuters reported. Specifically, exports have been very strong for Mexico after a rough start to the year. More than 80% of all exports go to the U.S., and severe winter weather hampered conditions there early on in 2014.
Inflation rate remains concern
While the economic growth is positive, some people are still concerned about the rate of inflation. The annual inflation rate reached 3.75% in June 2014, according to Reuters. The goal for the country's central bank is closer to 3%, although the ceiling is set at 4%
"The important thing is that we arrive to where inflation fluctuates sufficiently close to 3 percent, a bit above, a bit below, most of the time, and it appears that we could finally be close," Sanchez told the news source.
Even so, other members of the central bank are still worried about the direction Mexico's economy is headed. A divide exists between those who believe that economic recovery is underway and those who feel that inflation is a very real threat, according to a separate article by Reuters.
Out of the five board members, two aren't happy with the recent vote to keep the interest rate at 3%. Two members also believe that there hasn't been an improvement to the growth outlook since June, while others argue to the contrary. The International Monetary Fund recently slashed its growth projection for Mexico from 3% to 2.4%, as well.
Despite worries, growth continues
While some economists are concerned about the environment in Mexico, conditions have been improving recently. According to the Latin American Herald Tribune, most of the growth has been driven by the strong exports sector in the country.
Finance Secretariat Economic Planning Unit chief Ernesto Revilla explained that June exports increased by 7.7%on a yearly basis, the media outlet reported. To further improve conditions, the U.S. economy is also on the way up. As the main exporting partner for Mexico, growth here means more potential for future gains.
"This is good news for the Mexican economy because via exports, higher manufacturing production and, especially, the public spending figures we are seeing, we would have to expect more dynamic second, third and fourth quarters." Revilla noted, speaking of the improved conditions in the U.S., according to the Latin American Herald Tribune.
Given these trends, there appears to be opportunity for global businesses in Mexico. Even so, it is vital that all businesses understand all the risks. To learn about safety and security, visit Mexico's risk assessment guide.
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