José Antonio Meade, Mexico’s Secretary of Finance and Public Credit, believes the future of the Mexican economy stands in good stead. When asked whether he thinks Mexico is a place where investors can look to with confidence he is in no doubt as to the benefits Mexico can offer. Furthermore, he says it is a place where people can look towards a long-term investment rather than just short-term gain.
“I believe that the Mexican economy has proven in recent years to be a resilient economy, and an economy where people investing here can have a long-term commitment. It is an economy where both domestically and outwardly, we are stable. We have our own finance in order to grow,” he says.
Mr Meade highlights Mexico’s lack of debt as a reason why the country can continue to sustain itself. The Mexican economy had “done its job” in a time of great uncertainty, and it is this stability that has allowed Mexico to be regarded as a good destination for potential investors.
According to The World in 2050, a report published by HSBC Bank, Mexico will continue with its rate of growth of 3 to 5 per cent over the next 40 years. It is likely to become the eighth largest economy in 2050. In addition, Jim O’Neill, Asset Management Chairman for Goldman Sachs, has said that Mexico will surpass Russia and India to become the seventh largest economy in the world by 2020.
There was further good news in the World Economic Forum Global Competitiveness Report. The report looks at the competitiveness of 144 economies and provides insights into the stimuli for the productivity and prosperity of the economies concerned. The report highlighted Mexico’s improvement: it has risen 13 positions in the last two years and was ranked 53rd in the 2012-2013 report.
There were also other factors: oil and a changed banking system were two of these. Oil was proving a considerable benefit for Mexico both at home and abroad. Despite his admittance that it was relatively expensive, Mr Meade points out the importance of oil to the heart of the Mexican economy. In conjunction with gas, it is fuelling Mexico’s economic growth.
“[Oil] certainly has helped Mexico become a very suitable place for investment, to export, but also a very good place to invest and meet growing domestic demand. Mexico is now a region where gas is relatively abundant and cheap, while oil has become relatively expensive. That combination gives Mexico a platform for growth not seen in our paradigm just three years ago,” he says.
According to Mr Meade, Mexico’s move from a traditional banking system to a more modern one is also reaping huge benefits. Modifying and modernising the banking process has, he believes, given more depth to the Mexican financial system. Putting the focus on improved technology and on modern regulation was giving the institutions a “transformative capacity”.
“I think we have gone from the establishment of branches and a relatively narrow range of products to a financial scheme that often goes beyond this, where we have been building innovative mechanisms in every way. The instruments offered today in insurance and banking provide everything from basic services with simple characteristics that satisfy the basic needs of those who access a financial service for the first time, through to more complicated products. The instruments also range from the traditional model of branches up to the possibility of niche banks and telephone and online banking,” he says.
Mr Meade is confident that the financial system will present many opportunities for Mexican companies within the Central American and Caribbean region. He states that lately these regions have offered Mexican companies “a very adequate environment – quite different from the traditional one – in which to develop their business activities.”
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