Market opportunity

Market opportunity

Mexico has a large and growing economy that is undergoing substantial modernization. Events that occurred since the past two decades, such as the opening of the economy, and the passage of the North America Free Trade Agreement (“NAFTA”) , among others, have been critical as first steps to cement the pillars of a sustainable growing economy. Mexico’s increased manufacturing competitiveness and the prospect of passing economic reforms are expected to generate attractive GDP growth.

Growing economy and domestic market
  • GDP Growth rate above 4% overall in past three years
  • Over half of the population under 27 years old
  • Emerging middle class
Strong country risk profile
  • Weathered 2008 economic downturn and quickly regained growth
  • Average fiscal deficit of 0.7% and inflation rate of 4.8% in the last decade
  • Public sector debt under 20% of GDP as of 2011
Increased competitiveness in the global economy
  • Increasingly attractive choice for labor-intensive manufacturers
  • Proximity to the U.S. market and numerous free trade agreements
  • Possible implementation of economic reforms
Limited availability of capital
  • Bank lending to private sector of just over 20% percent of GDP
  • Low private equity participation compared to BRICs

 

Sources: Santander Investment Report; Deutsche Bank Research; Trading Economics, INEGI; Nomura Equity Research; CNBC; Emerging Markets Private Equity Association