Mexico: In the eyes of big brokers

Due to its geographical location, its human capital and the great growth of its internal market, Mexico is in the eyes of the big brokers, who are increasingly turning their attention and investing in the Aztec country, considered as the best-positioned emerging economy. Let’s look at the details.

Mexico: the second largest economy in LATAM

Mexico is a territory of 1.973 million square kilometers, with a strategic, privileged and enviable location: it has access to both oceans and is the communication gateway between Latin America and North America.

By 2022, Mexico’s GDP was estimated at 1.27 trillion USD, according to figures from the World Bank. Thus, it is considered that it is the second largest economy in Latin America, behind Brazil, as well as the fourth in the continent and thirteenth in the world.

Over the past year, Mexico grew by 3.1%, less than what was experienced in 2021, when it reached 4.7%. Though for this 2023 the outlook is not so encouraging, since it is expected to be only 1%, with an inflation of 5.2%.

On the other hand, in the world, it ranks tenth as the largest export economy. In this sense, its exports totaled 578 billion USD in 2022, increasing by 16.9% (according to INEGI). And imports have also grown: 604 billion USD for the same period.

Its main partner, in the sense of receiving the majority of exports, is the United States: 330 billion USD in 2020 (79.24% of the total). It is interesting to note that it has a positive trade balance with the European Union (105%), as well as with most Latin American countries except for Chile.

Also, remains one of the region’s leaders in agricultural products, such as avocado (the world’s largest producer), corn, pumpkin, bean, pepper, tomato, mango, papaya, melon, pineapple, sugar cane, lemons and oranges. In all these areas it is in the top ten. ​

In mining, mainly silver (the world’s largest producer), mercury (third in the world), oil and natural gas. In particular, among its main industries are vehicle assembly (sixth place in the world), beer (fourth place), and steel (15th). However, the largest component of GDP is the tertiary sector: more than 60%.

The internal market

Mexico has a population of 126 million inhabitants (number eleven in the world), of which 60.1 million people are economically active. As for the GDP per capita, it was estimated at 10,833 USD for 2021.

Nevertheless, it is not among the highest since it is slightly below the average for the region, estimated at $12,443; this average includes high-income Caribbean territories.

Now, we are talking about a rather large potential market – one hundred million people. Larger in volume than that of many nations. This market, which represents 70% of the country’s economy, is also booming.

And is that Mexicans have increased their annual income, which has, in turn, meant greater demand for various products and services. In this regard,  El Estado notes that domestic consumption in the country increased by 3.4% in real terms, in the last year.

An important aspect that should be noted is that Mexico has established several free trade agreements with various nations, thus helping in the internationalization of its products, as these reach more than one billion consumers in 44 countries, which in turn contributes to improving the quality of life of the population.

Among the main treaties are mentioned:

  • USMCA: United States – Canada – Mexico.
  • APEC: Asia-Pacific Economic Cooperation Forum.
  • TLCUEM: with the European Union.

Additionally, another point in favor of its internal growth is that the country attracted, in different agreements, 24 billion USD in foreign direct investment. Similarly, the government has launched a campaign to promote their country as a destination for relocating productive activities, due to its lower production costs.

The rise of trading in Mexico

As we mentioned at the beginning, Mexico is in the eyes of the big brokers, due to its geographical location, its human capital and the great growth of its internal market; moreover, trading becomes an increasingly important activity in the Aztec country.

There are several figures on this subject; among these, we can mention the following, according to various sources:

– According to the CNBV (National Banking and Securities Commission), the investment accounts registered in brokerage houses went from 299,582, before Covid-19, to 2,810,568 accounts by the end of 2022: an increase of more than 800%.

– On the other hand, the same source indicates that the total amount of operations went from 6.897 trillion pesos to 7.835 trillion pesos.

– The Mexican peso (MXN) is among the most active currencies; it is the fifteenth most traded in the world. And among developing countries, it is surpassed only by the Yuan.

– The Mexican Stock Exchange Group (GBM), which is already a unicorn, reports a growth of 680%, with more than 20 million daily requests, and ensures that it will turn one million Mexicans into investors.

A favorable environment for investing

Currently, Mexico is considered one of the LATAM economies with the greatest facilities for doing business, which seeks to improve the regulatory framework to favor foreign investment and strengthen local entrepreneurship.

Thus, the opening of a headquarters in the Aztec country is an attractive alternative that investors have considered, or are considering, as a gateway to the Latin American and North American markets.And many already know this. Therefore, Mexico continues to be under the watchful eye of different brokers, who will surely not miss the opportunity to invest in this great emerging economy.

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