After a strong recovery last year, local and foreign investors are optimistic about growth and investment opportunities in Mexico. The strong recovery in 2010 was fueled by the increase of exports and tourism as well as growth in the mining industry. These factors helped produce an economic growth of 5.5 percent. This was the best result Mexico has experienced over the past decade. Mexico looks to continue this economic growth trend and the good news is 2011 seems to be shaping up just as well.
This year has gone well thus far as Mexico is benefiting greatly from its proximity to the United States, sound macroeconomic policies, and government initiatives to cut red tape. These initiatives are reflected in the Doing Business 2011 survey from the World Bank, in which Mexico places first in Latin America and 35th worldwide. The International Monetary Fund estimates GDP growth of 4.6 percent this year for Mexico, a better rate than Brazil’s estimate. The private-sector projections share a similar sense of optimism with an estimated growth of 4.5 percent in 2011. These are not the only projections that are promising for Mexico. The American Chamber of Commerce projects foreign direct investment of $22 billion this year, representing a 24.3 percent increase from 2010. All these estimates add up creating a positive business outlook in Mexico but challenges still lie ahead.
Violence and illegal activity in border regions of Mexico threaten tourism in some areas of the country. This would present many problems as Mexico is Latin America’s top tourism market by far and a part of Mexico’s economy depends on tourism. Other questions have emerged if economic growth in Mexico can be sustained with its export-focused policies and unwillingness of Mexicans to increase spending. Corruption is another challenge that remains problematic in Mexico. The country dropped to 98th place in the latest Transparency International survey trailing many other Latin American countries.
Despite these many problems, Mexico’s GDP is expected to grow by an annual average of 4 percent over the next three years. Many companies are confident on the business outlook of Mexico and will look to overcome challenges along the way. Expect Mexico to be solid over the next three years as Mexico displays its strong local manufacturing presence and its great ability to export.