Mexican exports: growth, destinations and products.

Extract of the article published in Plaza de Armas, May 9th, 2011

Since Mexico entered the GATT in the 80s, commerce began a dynamic of internationalization that has generated the signature of 15 trade agreements with more than 40 countries.

Let’s analyze the exports side of the foreign commerce activity.. If we evaluate since 1993, a year before the beginning of NAFTA, Mexican total exports has had an average annual growth of 10.8%. This growth has placed Mexico in number 15 during 2009 according to the World Economic Forum (an improvement of one place compared with 2008).

Now, I’ll focus the analysis only in non-oil exports (oil exports represent 14% of the total exports), to understand the behavior of the products that come from the rest of economic sectors.

In 2010 we exported products to 199 countries. When we see the composition of those exports, we find a high concentration in the United States. In 2000, that concentration had its peak when it represented 90% of non-oil exports; but since then, there has been a slight trend to reduce that concentration, reaching 80% levels since 2008. The regions that have increased its participation are South America, Asia and Europe.

Region/Country	Participation in 2000	Participation in 2010	Change
United States	90.1%	79.4%	-10.7%
South America	1.7%	5.6%	+ 3.9%
Asia	1.2%	3.8%	+ 2.6%
Europe	3.2%	5.2%	+ 2.0%
Canada	2.0%	3.9%	+ 1.9%

Made by  Atalaya with data from the Group of Work of External Commerce Statistics, formed by BANXICO, INEGI, SAT and Economía.

The countries that have influenced more this change in composition due to their growth as destinations are Colombia, Brazil, Argentina, Chile, Holland, Germany, China and Japan.

Now, regarding the kind of products, the two main sectors are machinery and electrical material, as well as vehicles and materials for transportation. These sectors represent approximately 66% of non-oil exports. There are sectors that have increased their participation in exports, like precious metals and stones, products of food industry, and medical and optical instruments. On the other hand, textiles have reduced its participation in exports.

As statistics show, different entrepreneurs are looking abroad, and it can be a strategy to diverse risks considering the different economic events that appear to be slowing down the current growth dynamic. There are different possibilities for exporting, and it can be either focusing in the destinations available through trade agreements (as with South America, considering the creation of a new commercial block with Peru, Colombia and Chile), or focusing in economies that are having strong growths (as China and India).

Construction in Mexico: recovering, but still a long way to go

Extract of the article published in Plaza de Armas (www.plazadearmas.com.mx), May 2nd 2011.

Construction represents 6% of the National GDP, and 8% of the employment. Besides, according to the Mexican Chamber of Construction, this sector has a direct influence in the development of other 37 economic sectors that are suppliers of materials and services. That’s why, traditionally, the economic sector is considered as a good indicator of the economic health of a country.

In Mexico, although the national economy has recovered the levels it had at 2008 1^st Q, construction is still 7% below the peak it had 3 years ago; in other words, it is at the levels it had at beginnings of 2007… so far, 4 years lost for the sector.

Elaborated by Atalaya, with data from INEGI.

(Seasonally adjusted, constant currency)

2008 1^st Q=100

A good result is that during the 4 quarters of 2010, it had a growing trend that resulted in a growth of 4.2% (you can read precedents of Construction and other economic sectors here).

What has happened at the beginning of 2011? The most recent figures come from the National Survey of Construction Companies, that do not represent the total of the sector, but let us know the level of activity of those companies by State and by kind of construction. According to the survey, the first 2 months of the year show an increase of 5.3% compared with the same months of 2010, in all the kinds of construction, including buildings (housing, schools, offices, industrial and commercial buildings, hospitals, etc.), that was the sector with more lags.

The perspectivas for the resto f the year are of growth. The Chamber has an estimate of 2.6%, less than the one obtained the last year; but other estimates of commercial banks gathered by the same Chamber has an average estimate of 4.5% growth. If this last forecast is fulfilled, the sector will be hardly reaching the levels it had at the end of 2007, still behind the peak of 2008; so, the perspectives keep positive but there is still a long way to go to have a total recovery.

In Queretaro, 2009 and 2010 had annual falls of 7.7% and 7% respectively. 2011 begins with an important growth in building and hydraulic constructions. Last week, the Secretary of Sustainable Development in the municipality of Queretaro announced the arrival of $4,000 million pesos in investments for executive hotels, industries, services and commerce companies. So, all the companies that participate in the productive chains for these constructions will have different opportunities during the year if the investments arrive.