The panorama of the industry in Mexico

Despite the stagnation in industrial activity in recent months, Mexico is facing what may be a historic opportunity.

The most recent figures for industrial activity in the country seem not very encouraging, in addition to the fact that the outlook for the coming months seems to be darkening. True, the production of goods has lost some of the momentum associated with the economic reopening and, furthermore, it is expected to suffer from the slowdown in consumption at the local and global level. On the other hand, it must not be forgotten that, just as there are challenges, there are also very important opportunities, especially with a view to the medium term.

According to what was published by the National Institute of Statistics and Geography (INEGI), industrial activity practically stagnated in November, registering a real monthly variation that was barely 0.0016%. If we annualize the average monthly growth of the last three months, it has gone from being consistently above 2.0% in the first seven months of last year (maximum 8.2%, minimum 2.2%), to staying below 1.0% between August and November (maximum 0.9%, minimum 0.0%). This is clearly evidence of a slowdown in activity.

Mexico is facing what may be a historic opportunity for its industry. After the pandemic, efforts have been made to make the supply chains of the North American industry more resilient, which leads to the expectation that more of its suppliers, which are currently located in Asia and other distant regions, will seek to relocate to Mexico, the United States and Canada.

This phenomenon may be exacerbated by the entry into force of the USMCA and the Sino-American disputes. Let us remember that the new North American trade agreement, the T-MEC, requires a higher content of inputs of domestic origin in some industries -such as the automotive industry- than its predecessor, NAFTA, so that a product can be traded free of tariffs. between the three signatory countries. In addition to taking advantage of the benefits of the USMCA, some companies would prefer to relocate to North America to avoid being affected, through tariffs or other barriers to trade, by political and economic distancing in the United States and China.

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