Even before he was elected, President Donald Trump had threatened to sever ties and revisit deals with Mexico in terms of business. The US trade deficit with Mexico is part of the reasons why Trump and the current administration made such remarks. While these threats are considered serious, the Mexican government is choosing not to respond to them in a negative way; for good reasons.
Mexico is growing stronger as an economic force. The country is exploring new avenues and shaping a better future for itself. What’s next for Mexico’s economy?
A Manufacturing Center
One of Mexico’s strongest suits is its manufacturing prowess. Mexico is the home of affordable yet reliable labor that makes setting up manufacturing lines very easy. A lot of companies from all over the world are already using Mexico as their base of operations as they expand to different parts of America.
Cheap labor is just the start. Mexico is also quick in catching up with the latest technologies. Its close proximity to the United States puts the country in the perfect position to set up factories. Companies moving their manufacturing operations to Mexico don’t have to worry about expensive distribution costs and other overheads as they ship their products to North America.
Let’s not forget that there are programs such as the IMMEX Program, which strengthen Mexico’s positioning as a manufacturing center even further. The IMMEX Program is interesting because it eliminates import tax and other costs for bringing in raw materials and components into Mexico. This program alone has brought hundreds of new manufacturing operations into the country.
An Energy-Rich Country
Another important point to note about Mexico is its strong energy reserves. Mexico is an energy-rich country with reserves of over 10 billion barrels of oil at its disposal. It also the home of more than 300 billion cubic meters of natural gas, a source of energy that is becoming more popular due to its cleaner nature.
Mexico is in a very strategic position in the energy market. It has the power to bring self-sufficiency to America in terms of energy. Combined with the reserves of other South American countries, Mexico can completely eliminate the region’s dependence on Middle East oil, changing the tide on international energy market.
Robust Policy Developments
The threats made by President Trump may prove to be damaging to Mexico’s economy. They may jeopardize the country’s economic stability, especially if the United States starts to take active steps towards reducing its trade deficit with Mexico. Mexico stands a chance of losing close to 60 billion in trade surplus if these threats are converted into policies.
These risks are pushing the Mexican government to take active steps to protect its economy instead of getting stuck in debates; this is where the good things start to happen. Policies are being introduced to further strengthen the country’s ability to remain flexible as a manufacturing center, while allowing new and existing businesses – including international companies – to take advantage of multiple tax breaks and incentives.
What’s next for Mexico’s economy? I believe we are looking at a bright future.
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