As of July, Mexico has surpassed China to become the U.S.’s leading trade partner, accounting for 15% of all American imports.
Several good signs boost Mexico’s economy. Its currency is strong against the dollar. The stock market is doing well.
Foreign investment in Mexico has surged 40%. Industrial parks are filling up fast. Nearshoring also adds to Mexico’s appeal.
Tensions between the U.S. and China offer Mexico an opportunity. The IMF has raised Mexico’s 2023 growth outlook from 1.8% to 2.6%.
Rogelio Ramírez de la O, Mexico’s Finance Minister, said nearshoring brought in $13 billion in early 2023.
Over 30 companies moved to Nuevo León after Tesla announced plans there. This Mexican state borders Texas.
Since 2019, Mexico’s industrial space has grown 30%, says real estate firm CBRE. But challenges remain for Mexico too.
It has a history of missing out on economic gains. Annual growth has been just 2% since NAFTA in 1994.
President López Obrador focuses on state-run firms. This affects private companies. Power outages and water shortages pose more issues.
Still, parts of Mexico are booming as industrial hubs right now.
Background
Mexico has a rollercoaster history with economic growth. Since NAFTA in 1994, it aimed for more trade with the U.S. and Canada.
This trade deal was a double-edged sword. It brought investment but also challenges. For years, China was America’s top trade partner.
Now, Mexico has this title. The U.S.-China trade tensions helped Mexico. Companies want stable, close places for factories and supply. Mexico fits that need.
But it’s not all smooth sailing. The focus on state-run firms limits private investment. Infrequent power and water supply can halt progress.
Yet, Mexico has many points in its favor. A strong currency and booming industrial areas make it a strong trade contender.