Mexico’s Exports Fuel GDP
With growth outpacing Brazil, no change in Mexican economic policy forecast
The New York Times took sidebar note of Mexico’s fast-growing economy during its coverage of June’s Group of 20 meeting.
Mexico’s economy grew faster than Brazil’s last year and it is on pace to beat its Latin American rival this year. Putting the brakes on the Brazilian economy: consumer debt, a strong real depressing industrial production, weakening demand in key export markets (especially China) and the falling price of key export products (especially commodities).
On the other hand, Mexico is exporting record quantities of televisions, cars, computers and appliances, replacing some Chinese imports to the US.
As the NYTimes points out, the countries pursue distinctly different policies, with Mexico opting for open markets, free trade and deregulation, while Brazil relies on government intervention through state-controlled companies. Each has felt the impact of China’s rise in distinctly different ways. For Mexico, China is a competitor, taking from its share of the US market. For Brazil, China is a major customer for its raw materials.
Mexican President-elect Enrique Peña Nietro campaigned on a promise to maintain macroeconomic policies similar to those of outgoing President Felipe Calderon, while targeting annual economic growth of 6% (compared to the current 3-4%). He has proposed opening up Pemex to private investments, with Brazil’s Petrobras as a model. He would also deepen ties with the US and the EU, while pursuing trade with China, Japan and India.
Here’s a quick look at Mexico’s exports in the first quarter (click on the table to enlarge):
Update: Here’s news of another positive indicator for Mexico: it is one of a handful of countries that stepped up manufacturing from May to June. The others: Hungary, India, Indonesia, Ireland, and Turkey. Austria, China, and Russia expanded factory activity in the same period, but at a slower rate than previously. See this list at the Wall Street Journal. Overall, the JPMorgan Manufacturing Purchasing Managers’ Index (PMI), on which the WSJ list is based, fell to a three-year low of 48.9 in June (when the PMI is below 50, factory activity is contracting).
Date posted: July 2, 2012