Mexico chasing Brazil on pitch, in economy
MEXICO CITY - Agence France-Presse
People walk past the Torre Latinoamericana, or the Latin-American Tower in English, illuminated by LED lights, part of an artistic intervention, in downtown Mexico City.While football-mad Mexicans dream of defeating their regional rivals for the ultimate trophy, some analysts say 2022 may actually be the year when Mexico dribbles past Brazil to become Latin America’s biggest economy. And Brazil is not the only global powerhouse that Mexico is challenging. China’s rising wages are making Mexico an increasingly attractive location for manufacturers, who are flocking here despite a relentless drug war.
The country’s rising fortune has inspired a series of optimistic notes by analysts from some of the world’s biggest financial firms. “We forecast that Mexico may overtake Brazil as the No.1 economy in Latin America as early as 2022, on the back of strong growth in human capital and total factor productivity,” Nomura Group analysts wrote last month.
“Embarking on a trajectory of high growth will mark the birth of the first, not tiger, but ‘jaguar’ country in Latam.” Mexico posted growth of 3.9 percent in 2011 and the central bank is forecasting growth of as much as 4.25 percent this year. Brazil’s growth slowed to 2.7 percent last year, while a mere 1.6 percent is forecast for this year.
Brazil’s slowdown came after it enjoyed a “golden decade” fueled by China’s appetite for commodities following the Asian giant’s entry into the World Trade Organization in 2001, Nomura stated in a previous note in May. Mexico, meanwhile, is at “the dawn of a new era” as more and more manufacturers set up shop here due to China’s growing labor costs, the Asia-based financial firm added.
The Boston Consulting Group, a global management consulting firm, says it could already be cheaper to produce in Mexico than in China.
“We believe that this year ... the costs of producing in Mexico are the same or lower than the costs of producing in China,” Hal Sirkin, a senior partner at the Boston Consulting Group, told AFP. Average manufacturing wages, when adjusted to productivity, were $3.06 an hour in Mexico in 2010 compared to $2.72 in China, he said. By 2015, They will rise to $5.30 in China and just $3.55 in Mexico. Sharing a border with the United States, the world’s biggest importer, has helped too.