Why 2019 will be a defining year for Mexico
By: Craig Dempsey
Tags: Trade, Latin America, Mexico, Business, 2019

Mexico is home to both the second biggest population and the second largest economy in Latin America, with a GPD of around US$1.15 trillion according to latest figures. And, despite challenging economic times in some other Latin American states, the country has enjoyed stability and growth in many sectors, with 2019 set to be a defining year. Below, I share my thoughts and predictions for the future of one of Latin America’s most exciting markets…

New Alliances

Since Andrés Manuel López Obrador’s victory and the United States–Mexico–Canada Agreement which was signed in late 2018, there has been a renewed sense of confidence, both politically and economically, in Mexico. Indeed, despite Donald Trump setting out plans to build a wall on the US-Mexico border, relations between the two countries are not as strained as some predicted, especially when you take into account the US-China trade war. What’s more, growth in the United States should remain stable in 2019, with many predicting the United States to grow by 2.5% in 2019. That’s great news for Mexico, as it means higher GDP per capita and higher levels of disposable income, which will increase import demand.

But it’s not just political alliances that are changing the way Mexicans do businesses. Indeed, independent groups and councils are unlocking huge potential for Mexico and putting the country on the world map. The Australia, New Zealand and Mexico Business Council (ANZMEX) is just one example of that, a scheme introduced to build Australasian-Mexican business relations and encourage further trade and investment between the nations. As the world becomes increasingly globalized and businesses look to work with partners in new markets, there has never been a better time to incorporate and take advantage of trading relationships. I know first hand that stepping outside of your comfort zone and setting up a business in a new territory can work — it may seem alien, but it can bring long-term rewards!

High Demand For Energy

One of the most exciting sectors is the Mexican energy sector, another key growth vehicle for 2019 and beyond. The country is committed to the Paris Accords and other international agreements and has a vested interest in creating more environmentally friendly energy for its own citizens, and to help countries around the world. Mexico has made it clear — it wants to help businesses build affordable, scalable renewable energy plants, and recently introduced a new regulatory framework and new regulations to encourage innovation in renewables.

Mexico has already made some stellar progress, hosting electricity auctions to award energy projects to private businesses, both based in Mexico and in other countries, which is helping to increase competition, lower prices and innovate the green energy market at a faster pace. This innovation offers opportunities across varying sectors — manufacturing businesses can reduce their carbon footprint, hospitality businesses can benefit from an increase in tourism, and all businesses can gain access to cheaper, greener energy to power their organizations.

A New Wave Of Entrepreneurship

Around the world, I have seen a huge shift in the way in which young people choose to enter employment, with many deciding to go it on their own and incorporate their own businesses. As the startup world becomes more exciting and the Mexican startup ecosystem grows more attractive to entrepreneurs from Mexico and around the world, the country’s tech scene is on the up, which unlocks opportunities across a whole host of sectors.

Thanks to Mexico’s close proximity to the United States, low labour costs and high standards of living, more and more entrepreneurs are setting foot in the country to incorporate their businesses. On top of that, venture capital deals have increased more than 600% in Latin America since 2011, with banks and private investors taking LATAM firms more seriously. In my experience starting a business in Mexico and across Latin America, I’ve seen a huge increase in startups, fueled by success stories, low barriers to entry and accelerators like 500 Startups, NXTP Labs, and Startup México designed to inject capital and power growth.

New Opportunities in Growing Sectors

Green energy is not the only sector in Mexico where I expect to see growth in 2019. Indeed, there are opportunities in a number of growing sectors, like in automotive manufacturing. With global firms like Fiat Chrysler moving their entire operations to the country and growing numbers of free trade agreements between Mexico and the world, the country is best placed for developing the next generation of cars, whether they’re petrol-powered or electric. On top of that, uncertainty around the United Kingdom’s withdrawal from the European Union is also encouraging major car manufacturers to pull out of the UK and look for more stable markets where talent is in abundance — Mexico will only increase its manufacturing strength in 2019.

I also expect that Mexico’s export market will see growth in 2019. The country is already the 12th largest exporter in the world, and with almost 80 percent of all goods being shipped to the United States, and growing tensions between the US and China and sanctions already warned, businesses will no doubt look to Mexico as a replacement. On top of that, Mexico has more trade agreements than any other country in the world, so Brexit should offer some additional avenues for trade in the coming years both with Europe and the United Kingdom.

Finally, there’s mining. The future of Mexico’s mining sector was up in the air following Andres Manuel Lopez Obrador’s appointment, as he had expressed some concerns over the sector before being elected. However, most business analysts still argue that the benefits of mining (job creation, economic growth, innovation) outweighs the potential environmental concerns and that new mining sites will be auctioned off in 2019 and beyond to further aid in the country’s growth. However, political reforms and a renewed focus on employee safety is a must, and many are already calling on the government for these changes to be made.

It would be impossible to predict exactly how Mexico will look in twelve months time, but it is clear that the country is on the up. I believe that 2019 will be a defining year for Mexico with increased foreign investment, homegrown innovation and a government focused on growth. Whether you’re Mexican or from another territory, don’t overlook the opportunities that await.