International Trade in Mexico

News Related to International Trade in Mexico

Business outline for Mexico

Main Industry Sectors

Agriculture accounts for approximately 4% of the GDP and employs 13.5% of the active population, however, the scarcity of credit continues to penalize this sector. Mexico ranks amongst the world's largest producers of coffee, sugar, corn, oranges, avocadoes and limes. Mexico is the world's 5th biggest producer of beer and its number two exporter. It is amongst the world's leading producers of many minerals, including silver, fluorite, zinc and mercury, and its oil and gas reserves are one of its most precious possessions: Mexico is the world's fifth largest producer of oil. The oil company PEMEX is the second most powerful company in Latin America, according to the industry journal América Economŕ­a. Cattle farming and fishing are also important economic activities.

The aerospace sector has grown sharply in the last five years, due to the presences of almost 190 companies, such as Bombardier, Goodrich, the Safran group and Honeywell, which together employ 30 000 people. Mexico is also one of the 10th major car producers. The hi-tech, information and software development sectors are also experiencing a real momentum, driven by the quality of the workforce, clusters and low operating costs, which allow for the establishment of call centers.

The tertiary sector contributes to around 60% of the GDP and the construction sector is coming up again due to real estate investments.

Economic Overview

Mexico became the 12th world economic power. Although the GDP fell sharply in 2009 (-6.5%), the GDP is predicted to rise by about 4% in 2010. Resumption of exports, especially car sales and US tourism are encouraging signs. The general economic outlook is relatively good. According to the different rating agencies, Mexico enjoys the €śinvestment grade€? status. The Doing Business 2010 report considers it the best country to do business in in Latin America; nevertheless, the growing security issues discourage investments and tourism. The corruption and inefficiency of Mexican bureaucracy are also among the country's weaknesses

FDI in Figures

Mexico is one of the emerging countries most open to foreign direct investment. However, over the last few years, its competitiveness has been slowed down due to the increase of organized crime and a lack of reforms in the energy, professional and financial fields.

The areas where foreign investments are concentrated the most are the border towns with the United States (where assembly factories are located), as well as the capital. The Yucatan peninsula continues to receive foreign investments thanks to its tourism appeal. These investments come especially from the United States and Spain (mainly from the banking sector). The sectors receiving significant foreign investments are finance, automobile industry and electronics services.

During 2010, the major investors in Mexico were the Netherlands with 7.461 million dollars, or 52% of total FDI and the United States with up to 30%. This reflects Heineken's significant acquisition of the beer operations of the Mexican group Femsa. Spain, on the other hand, has significantly reduced its investments in the country. With nearly 14.362 million dollars of FDI in 2010, Mexico's appeal has again increased, compared to the last two years. According to the 2010 global competitiveness report of the World Economic Forum, Mexico ranked 28th in terms of foreign investor confidence.

FDI Government Measures

The Mexican Government has created an open and safe environment for foreign investors. The recently undertaken economic policies should allow investors to manage the safety of their operations despite the unfavorable global external environment.

Public tresury funds have been made available to private companies that have been heavily affected by the crisis. Thus in November 2008, the Mexican government saved the Vitro company, one of the world's biggest glass producers, which was having liquidity problems because of its debts. The amount disbursed to save it was evaluated at 100 billion dollars. The cement corporation, Cemex, in turn registerd a 15 billion dollar debt, a debt which is higher than the value of the company, due to the collapse of the world construction sector.

Country Strong Points

- Mexico forms a bridge between North America and Latin America due to its geographical location;
- Mexico has an extensive variety of natural resources allowing for the development of all types of industries at competitive prices;
- Mexico is very open to direct foreign investments;
- Labor costs are not high and in general, there is a skilled labor force;
- Positive structural reforms have been made during the current presidential term;
- Mexico is the world's 8^th tourist destination.

Country Weak Points

- The country depends excessively on its partnership with the United States;
- There is a high level of corruption;
- During the last few months, violence has increased especially the drug cartels;
- The country is encountering significant structural problems (economic and social).

Foreign Trade Overview

Mexico is one of the countries that most depends on foreign trade.  Foreign trade represents around 60% of its GDP.  Mexico has 11 free-trade agreements with 43 countries of the world. It is a member of NAFTA - the free-trade agreement that unifies the United States, Mexico and Canada, since 1994. The country signed a free trade agreement with the European Union in 2000 and a commercial agreement with Japan came into force in April 2005.

The United States buys 80% of Mexico's exports. Its main export partners are the NAFTA and the European Union. The main export goods are electrical and electronic equipment, vehicles, mineral fuels, oil and machinery.  Its three main import partners are the NAFTA, China and Japan.  It mainly imports electrical and electronics equipment, machinery, vehicles and plastic products.

In 2010, Mexican exports increased by 32% on the previous year. During the same period, internation car sales increased sharply by 76.8%, which may also represent a threat of dependency for the Mexican economy.