Demand for American-Made Products Growing in Mexico

ABC News, 5/6/2013

There is surprising cargo showing up on trains in Mexico. Straight from Dearborn, Mich., Ford vehicles are heading into Mexico City, where demand is high among Mexico’s growing middle class. It’s the quality, locals say, that they’re after. Vehicles like the Ford Escape travel for 14 days on a train from plants in Avon Lake, Ohio; Oakville, La.; Chicago; and Kansas City, Mo.

But cars aren’t the only American-made products in demand in Mexico. Exports to Mexico and all of Latin America, including Brazil and Argentina, are up 121 percent in the last decade. Even the beef burgers at Carl’s Jr. in Mexico are imported from the United States. The fast food chain, which has opened 20 new restaurants in Mexico this year

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6 million U.S. jobs depend on trade with Mexico – #MexFacts

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40% of content of Mexican imports actually produced in the U.S. – #MexFacts

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For American Exporters, Mexico Is The China Door

Forbes, 1/25/2013

Last year was a tough year for American exporters.   After steady increases since the bottom dropped out of the U.S. economy in 2008, exports fell again in 2012, even to nation’s where consumption doesn’t seem to sleep like China and Singapore.

Out of the top 10 U.S. trading partners, Mexico stands apart. U.S. exports are rising and Mexico is one of the reasons why. Every major trading partner saw a decline of at least five percent in their imports from the U.S. Only Mexico continued to buy American.

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Mexican Economy Slows on Weak Exports

Wall Street Journal, 11/16/2012

Mexico’s economic growth slowed down in the third quarter as the export engine of Latin America’s second-largest economy started to feel pain from U.S. growth and fiscal worries. Mexican gross domestic product expanded 3.3% in the July-September quarter compared with a year earlier, the national statistics agency said Friday. GDP was up 0.45% compared to the second quarter in seasonally adjusted terms, equivalent to an annualized rate of 1.8%.

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Give Mexico A Chance

Foreign Policy, Robert Looney, 7/16/12

Just when everyone seemed ready to throw in the towel, the economy is showing signs of fulfilling its potential. Mexico grew by 4.0 percent in 2011, and the IMF is forecasting gains of 3.6 percent for 2012 — hardly stellar for an emerging-market economy, but better than Brazil, with corresponding rates of 2.7 percent and 3.0 percent. What’s more, Mexico has managed to grow in spite of the surge of drug-related violence in key industrial zones…

It’s tempting to attribute Brazil’s economic successes and Mexico’s lackluster performance to their respective approaches to economic policy. Mexico has worked doggedly to implement the neo-liberal Washington Consensus approach to macroeconomic management — budget discipline, central bank independence, anti-inflationary monetary policy, and pro-market liberalization, including the development of a truly private banking system. In contrast, Brazil has mixed market neo-liberalism with an eclectic, proactive approach to economic policy; its “heterodox” features include a large, partially state-owned banking system with complex, discriminatory rules for credit allocation, and reliance on a witch’s brew of state-led investment strategies aimed at eliminating infrastructure bottlenecks…

While it is fashionable in some quarters to attribute Brazil’s higher growth rates to the country’s pragmatic approach to economic management and Mexico’s adherence to the neo-liberal gospel, I believe Mexico’s economic performance is largely a product of the demand for Mexican products by the U.S. The numbers certainly support this view: The IMF found a high correlation between Mexican exports and GDP, with changes in exports statistically accounting for 86 percent of the variations in the country’s growth rate between 1996 and 2010.

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Making the desert bloom

The Economist, 8/25/11

HOT and high in the Sierra Madre, the city of Saltillo is a long way from Wall Street. Stuffed goats keep an eye on customers in the high-street vaquera, or cowboy outfitter, where workers from the local car factories blow their pesos on snakeskin boots and $100 Stetsons. Pinstriped suits and silk ties are outnumbered by checked shirts and silver belt-buckles; pickups are prized over Porsches.

The financial crisis of 2008 began on the trading floors of Manhattan, but the biggest tremors were felt in the desert south of the Rio Grande. Mexico suffered the steepest recession of any country in the Americas, bar a couple of Caribbean tiddlers. Its economy shrank by 6.1% in 2009 (see chart 1). Between the third quarter of 2008 and the second quarter of 2009, 700,000 jobs were lost, 260,000 of them in manufacturing. The slump was deepest in the prosperous north: worst hit was the border state of Coahuila. Saltillo, its capital, had grown rich exporting to America. The state’s output fell by 12.3% in 2009 as orders dried up.

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U.S. Stimulus to Sustain Mexico’s Record Run

The Wall Street Journal, 1/5/2011

Mexico’s highflying stocks likely still have room to rise in the first quarter, as U.S. economic stimulus further drives demand for Mexican exports after a solid 2010 recovery and domestic consumption plays a bigger role in local growth.

The IPC index of the 35 most-traded stocks rose 20% last year — 27% in dollar terms—and closed at a record 38550.79. The index could reach 40000 to 40500 by the end of March, said Gerardo Copca, head of capital markets for the local research firm Metanalisis.

The first period is likely to see accelerated U.S. economic growth, he said, and Mexican companies’ 2010 results, due in February, “are going to be a good detonator for the markets.” Most companies are expected to report higher sales and profit margins.

The lagging construction sector could also see improvements going into the new year, Mr. Copca said, as more backlogged projects start up.

Traders and analysts will be looking closely at U.S. employment and gross domestic product, since 80% of Mexico’s exports head north, and manufacturing gains in both countries have been an important engine for recovery.

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Mexico’s Economy Probably Shrank 7% in First Quarter

Bloomberg, 5/1/2009

Finance Minister Agustin Carstens

Mexico’s economy probably shrank 7 percent in the first quarter from a year earlier as exports plunged, the Finance Ministry said.

The country’s gross domestic product fell for a second straight quarter “due to the deterioration of global economic conditions,” according to an e-mailed statement released late April 30 in Mexico. The official GDP number is due to be released May 20.

Latin America’s second-biggest economy is heading for its first annual contraction in eight years as the slump in the U.S., which buys about 80 percent of Mexican goods sold abroad, dents demand for the nation’s exports. Mexico’s government forecast in April the economy will contract 2.8 percent this year.

The outbreak of the swine flu virus may cut GDP by an extra 0.3 to 0.5 percentage point, Finance Minister Agustin Carstens said yesterday.

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A presentation by Gary Hufbauer and Barbara Kotschwar at the Peterson Institute of International Economics provides more background on the economic situation in Mexico.

FACTBOX-Mexico’s car industry in crisis

Reuters, 3/10/2009

Mexican auto exports and production plunged in February in a dramatic sign of how the economic slump is hobbling Mexico’s manufacturing base.

Mexico’s car industry, which primarily supplies the United States, now expects output and exports will both drop by up to a quarter this year as the U.S. recession bites.

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