Japanese investment bank Nomura released an analysis yesterday with a very positive outlook for the overall Mexican economy.
The brief highlights the country’s growing middle class and its strong financial sector. As well, it is optimistic about much-needed reforms in the labor and energy industries which will likely have the backing of both the Institutional Revolutionary Party (PRI), which just won the presidency and the most seats in the legislature, and the National Action Party (PAN), Mexico’s second largest political party in Congress. This environment for potential collaboration between the two parties could pave the way for legislative accomplishments that would set the conditions for Mexico to outdistance Brazil as the largest economy in Latin America.
Mexico is already set to compete with Brazil in the auto industry and in other manufactured products due to growing wage inflation in China. This means it is less likely to be affected by a Chinese economic slowdown than commodity markets such as Brazil.
Some conditions must be met for Mexico’s growth to take off, says Nomura. Maintaining collaborative relations with the United States—to which Mexico sends 80 percent of its exports—and a steady improvement of the U.S. economy are two critical factors. The bilateral relationship, however, will not change despite both countries holding elections in 2012, according to an article by AQ Editor-in-Chief Christopher Sabatini in El Universal.
