MNCs that invested in Mexico in 2011 saw their bets pay off and have set high targets for sales growth in Mexico in 2012. High top-line performance will be augmented by Mexico’s superior profitability relative to high-cost Brazil. Companies that avoided dependence on Brazilian growth will continue to be rewarded throughout 2012 as increasing attention turns to Mexico.
Trend
Mexico is outpacing Brazil as a source for growth for MNCs
- In 2011, FSG clients saw average sales growth in Mexico of 21%, compared to 13% for Brazil
- Despite an expected deceleration of growth in 2012, FSG clients expect sales growth in Mexico to slightly outpace sales growth in Brazil
Expansion in the manufacturing sector was a leading force for growth in 2011
- Current projections expect growth in industrial production to remain in the 5%-6% range in 2012 despite growing external economic uncertainty
- Industrial production is increasingly destined for domestic markets
Drivers
Continued confidence in Mexico’s policy direction and domestic economic outlook is driving further investment across industries
- Producer confidence increased in January 2012, with producers citing a growing belief that this is the time to invest
- President Calderón promulgated a new law on public-private partnerships that should boost private-sector investments through 2012 and beyond
Capital investments are driving growth for manufacturers
- Mexican companies’ investments in capital goods increased by 6.7% YoY in November, with machinery and equipment posting a double-digit increase
No related posts.
