Economic overview
Mexico is the second-largest Latin American economy, behind Brazil. It’s also the third-largest U.S. trading partner, after Canada and China. The drop in petroleum prices hampered Mexico’s economic growth over the past year. Petroleum exports fell 43.7% in December, compared to the same month in 2013. Mexico’s export crude oil was $52.37 a barrel in December, from $91.78 per barrel at the end of 2013. But the country’s manufacturing industry has strengthened as oil has waned, showing a 15.8% increase in exports in December. Mexico’s economy expanded an estimated 2.2% last year. Economists expect this year’s growth rate to range from 3.3% to 3.5%.
Business travel industry insight
Business travelers can expect to find high-end accommodation in all major Mexican cities and resort towns. Telecommunications is well-developed with good mobile coverage and access to high-speed Internet in urban areas. Major credit cards are widely accepted, and ATMs are plentiful and reliable, although visitors are warned to watch their surroundings and avoid using self-swipe machines because of the risk of fraudulent card cloning. Money-laundering laws established in 2010 limit using U.S. dollars and other foreign currency as payment for goods or services. In addition, most Mexican hotels will no longer exchange U.S. dollar travelers checks for pesos. Conducting currency exchange at a bank can be time-consuming and complex; an exchange house (casa de cambio) is a better option. Violent crime fueled by the illegal drug trade continues to be a major concern in Mexico, although most visitors do not encounter it. Nonetheless, business travelers are warned to be cautious and avoid high-crime areas and public protests.
Opportunities
- The Mexican economy is expected to benefit this year from a sustained U.S. recovery, which should drive manufacturing exports.
- The government has passed oil industry reform measures, allowing private investment in a sector long controlled by a state-owned monopoly.
- In addition, the government has put in place financial services reforms designed to promote competition in banking and increase access to credit for small businesses.
Challenges
- Anti-violence and anti-corruption protests have been steady since September, when 43 college students disappeared and were later reported to have been murdered by a drug cartel. The public’s dissatisfaction has weakened the government of President Enrique Peña Nieto, whose approval dropped from about 60% to around 30%.
- Prolonged low oil prices could hurt government revenues and hamper the progress of some reform initiatives. About a third of government revenues come from the oil industry.
- The Mexican peso has fallen more than 10% since September, which officials fear could spark inflation.
