Important Facts About Mexico's Economy:
Mexico has the potential to be an emerging market heavy-weight. Here are the important facts about Mexico's economy. Mexico's GDP is just over $1 trillion, about the same as Canada, Spain or South Korea. Mexico is geographic size of Saudi Arabia, but has 5 times as many people and exports 1/4 of the oil.
Mexico’s GDP growth was 1.4% in 2008 - slower than the world average of 3.8%, but faster than its trading partners the U.S. (1.2%) or Canada (.6%). Mexican GDP per person is $14,200, higher than any other Latin American country except Chile. (Source: CIA Factbook)
Mexico's Economy Depends on Exports to the U.S.:
Mexico sends 82% of its exports to the U.S. Trade with the U.S. and Canada has tripled since the implementation of NAFTA in 1994. More than 90% of Mexico's trade is under free trade agreements, including 12 free trade agreements with over 40 countries including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan.
Oil Exports Drive Mexico's Economy:
Mexico is the world's sixth largest producer of oil, exporting more than 2 million barrels per day. Since the oil companies are government owned, about half of the government’s income is dependent on oil. Privatizing the oil industry would require the government to either increase the tax rate or expand the tax base to include many large non-taxed businesses.
Mexico has recently built up its infrastructure to enhance trade. In 2007, Mexican telecommunications czar Carlos Helu was the world's richest man.
President Calderon's Priority Is Economic Development:
President Felipe Calderón-Hinojosa outlined the priorities for his six-year term.
- Upholding legal institutions.
- Insuring public security, such as military sweeps to crack down on organized crime and corrupt local police.
- Improving the country’s economic competitiveness.
- Providing better healthcare.
- Protecting the environment.
Challenges to Mexico's Economy:
The economy faces several challenges, including the need to:
- Privatize the oil industry. This must happen before foreign investors will help extract more oil.However, it will deprive the Mexican government of much of its revenue.
- Upgrade schools, roads and health care services.
- Modernize the tax system and labor laws.
