Mexican economy poised to rival BRICS
- By Zhou Zhipeng
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E-mail China.org.cn, March 23, 2012
It is not realistic to predict exactly which country will become the next BRICS country, but more and more experts believe that the gap between Mexico and the BRICS will gradually narrow. Mexico's total economic output will squeeze into the world's top 10 over the next few years, making it an important impetus for the global economic growth.
With a land area of 1.972 million square kilometers and a population of 112 million, Mexico is the second largest economy in Latin America. Over the past decade, it has maintained political stability and stable economic growth. In 2011, Mexico became the world's 14th largest economy, with its GDP exceeding US$1 trillion. Its total economic output was quite close with that of Australia and Spain and was roughly 36 percent lower the economies of Russia and India, both BRICS members.
Jim O'Neill, asset management chairman for Goldman Sachs, once said that Mexico will surpass Russia and India to become the 7th largest economy in the world by 2020. According to a report "The World in 2050" published by the HSBC Bank, Mexico will maintain a growth rate of 3 to 5 percent over the next 40 years and is likely to become the 8th largest economy in 2050.
Bright development prospects in Mexico have recently attracted large amounts of foreign investment. Japan's Nissan Motor Company announced it would invest US$ 2 billion to build a third plant in Mexico; US Coca-Cola announced a US$1 billion investment in Mexico this year; Wal-Mart Stores, Inc. also plans to invest US$1.6 billion in five nations, including Mexico. In addition, Hilton Hotels and Resorts, Spain's Iberdrola, Bank of Tokyo-Mitsubishi UFJ also announced their future investment plans in Mexico.
Economists are especially positive about the prospect of the Mexican manufacturing industry. They believe that Mexico's border with the US is its most prominent advantage over the current BRICS. Over the past 20 years, owing to the North American Free Trade Agreement, Mexico has sped up the process of Mexico-US integration and greatly promoted the development of the industries oriented towards US exports.
The US is Mexico's largest trading partner and largest foreign investor. Mexico's exports to the US account for 83 percent of its total exports. 16 percent of petroleum, 24 percent of cars and auto parts, 21 percent of electronic products and 23 percent of chemical products in the US market come from Mexico.
A nation's rise doesn't depend solely on its exterior circumstances; it also depends on its sound management. Some Latin American experts have pointed out that Mexico is the largest oil producer in the Latin American region. Its reserves of 15 minerals, including gold, silver, copper, lead, zinc, are among the largest in the world. Mexico's rich natural resources lay a solid foundation for its future economic development.
Mexican authorities are actively promoting a wide range of reforms to ensure the country's sustainable economic development. These include reforms in the power, oil, minerals, and telecommunication industries, as well as updates to the tax and labor codes.
Recently Mexico also strives to expand the regional integration through the Latin America's Pacific Alliance and is seeking to diversify its trade with the region, especially in tertiary industries. In the long term, the rise of such emerging industries including aerospace, medical equipment, medical services and software information will become the "new pillar" of Mexico's economy.
This post was first published in Chinese and translated by Zhang Ming'ai
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