January 3rd, 2019

Mexico’s Fundamentals, A Destination for Investment

The United Mexican States (official name of Mexico) is a North American country that borders the United States, Central America, and the Caribbean. A federal presidential republic, Mexico is one the key trading partners of the United States and one of Latin America’s largest agricultural producers.

Mexico’s Fundamentals, A Destination for Investment

In recent years, Mexico has also been an attractive investment and tourism destination given its plentiful resources and a favorable exchange rate. Back in May of 2014, the Mexican Peso (MXN) as valued at approximately 13 Pesos to one US Dollar (USD). Since then, the exchange has tilted in favor of incoming foreign investment with the Peso reaching almost 22 MXN to one USD in January of 2017. As of January of 2019, the Mexican Peso is trading at approximately 20 MXN to one USD.

Currently, Mexico has a total population of 126 million citizens with an average age of 29 years, making the second largest national market in Latin America. Furthermore, about 80% of the population lives in an urban setting, notably in Mexico City with its 22 million inhabitants. This means that the majority of the domestic market relies on food that is produced by major agricultural operations throughout the country.

The annual gross domestic product (GDP) of Mexico is US$2.5 trillion (PPP), making the eleventh largest economy in the world. Moreover, Mexican economy has experienced positive economic growth upwards of 2.0% in recent years. As of today, the national economy is divided into 4% agriculture, 32% manufacturing, and 64% services. Meanwhile, the national labor force is divided into 14% working in the agriculture industry, 24% working in the industrial sector, and 62% working in services. Similarly, the national agriculture industry utilizes about 55% of the national territory, while another 33% is forested.

In terms of natural resources, Mexico has petroleum, silver, antimony, copper, gold, lead, zinc, natural gas, timber. Within manufacturing, the national industry is focused on food, beverages, tobacco, chemicals, iron, steel, petroleum refining, mining, textiles, clothing, and motor vehicles. Likewise, a significant amount of Mexico’s economic activity is dependent upon tourism. Simultaneously, the country’s agricultural industry has as main products corn, wheat, soybeans, rice, beans, cotton, coffee, fruit, tomatoes, beef, poultry, dairy products, and wood products.

In terms of trade, Mexico is the world’s ninth largest export economy. During 2016, the country imported US$369 billion worth of goods and exported US$394 billion, resulting in a trade surplus of US$25 billion. Furthermore, that same year, the country’s main export, representing 8.6% or US$34 billion of the total, were cars. On the other hand, Mexico’s main import, representing 6.2% or US$22.8 billion of all international purchases, were vehicle parts. Meanwhile, Mexico’s main trading partners are the United States, China, Canada, Germany, and Japan.

(Read more about Asparagus Trade and Agribusiness in Peru)

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