2010 Population census: demographic changes in Mexico

Published in Plaza de Armas (www.plazadearmas.com.mx), March 28^th 2011.

In November last year, INEGI published the preliminary results of the 2010 Population and Housing Census. In the beginning of this month, they published the definitive results, and we have known a huge amount of information about our population, educational, economic and housing profiles.

From this huge amount of data, that will need a lot of study and analysis, I extracted some pieces that help us to identify interesting social trends and groups with specific needs.

We are more than 112 million Mexicans (11^th place in the world). The population growth kept its decreasing rate that started in 1980. This trend has already changed our population pyramid profile, since we are reducing the base and slightly widening the top:

	1990 Census	2010 Census
0-14 years population	38.6%	29.3%
More than 65 years population	4.2%	6.3%

However, Mexico is still a country of young people. Half of the population has 26 years or less, and we are living what is known as the “demographic bonus”; it means the period in which the change in the population pyramid creates the biggest working force (people from 14 to 64 years). This period is supposed to be a historic opportunity in terms of productivity, but the slow rate of employment recovery we are having is turning it into an important social risk due to the amount of young people without labor opportunities.

Half of our population concentrates in 7 States out of 32: Mexico, Distrito Federal, Veracruz, Jalisco, Puebla, Guanajuato and Chiapas. In the country, one of five Mexicans live in a State different to the one they were born, with such different behaviors as Quintana Roo (the state where Cancun is), where half of its inhabitants was born in other states, or Chiapas, where more than 96% of its inhabitants was born there.

This result is explained by our internal migratory movements. In the last 5 years, the 5 states that have proportionally received more people from other states are: Baja California Sur, Quintana Roo evidently, Colima, Nayarit and Querétaro. In the opposite situation is Distrito Federal (Mexico City), since it is the state from which more Mexicans emigrate, mainly to neighbor states, and within them, especially to the state of Mexico.

This produces very different population dynamics in our states. On one side, the states that have the biggest growth rate in the last 10 years are Baja California Sur, Quintana Roo and Querétaro. This implies big challenges in the creation of housing, infrastructure and employment; but it also creates opportunities in the growth of local markets for goods and services.

In the opposite situation we have Distrito Federal, Guerrero, Sinaloa, Zacatecas and Michoacán, since they have the slowest growth rate in the same period. This is a consequence of different structural situations in infrastructure, quality of life and economic perspectives, and their challenge is to break these dynamics that are not healthy in the long term.

In 20 years, the population in urban zones (more than 100,000 inhabitants) went from 44.4% to 47.8%. This is consistent with the world dynamic, where 51% of the population lives in urban environments. This has advantages considering the cost for developing the required infrastructure, but represents huge challenges regarding quality of life.

In a different perspective, another group that had an intensive growth in the last 10 years is the population born in another country, which duplicated and is currently close to one million inhabitants. This shows important changes in economic, social and cultural dynamics, and represents a social group that is growing at an unprecedented pace.

Another social group important to watch and to pay attention to is the handicapped population. It is true that in recent years we have gained a lot of consciousness and sensitivity about their conditions and needs, but we still have a lot of work to do referring to respect and equality. There are 5.8 million people in the country, where the most common disability is for moving or walking (58%), followed by seeing (27%) and hearing (12%). Obviously, each group has different needs.

Finally, there are 28.6 million homes in the country. Two important changes are the increase of homes with computers (went from 9.3% to 29.4% in the last 10 years), and in the ownership of cars (from 32.5% to 44.2%). This shows needs that people will keep satisfying and the creation of new opportunities.

Censuses definitely have valuable information, but it is our responsibility to analyze them, not only as a “still frame”, but as a movie when we compare different years. This will help us to understand the different dynamics and therefore identify risks and opportunities for business development.

Data for Querétaro
Variable	Value
Population	1,830,000 people (2.6% annual growth in 10 years)
Population born in other state or country	23.8%
Population that lived in another state 5 years ago	5.9%
Handicapped population	67,000 people
Homes	450,000 (4.2% annual growth in 10 years)
Homes with Computers	34% (above national average)

Tourism and insecurity, where are we standing?

Published in Plaza de Armas, newspaper from Queretaro, March 7^th 2011

During the recent weeks, a lot has been said about the numbers announced by the Ministry of Tourism referring to the increase on international tourism in the country during 2010. There is a lot of incredulity because there are many cities where the arrival of tourists has dramatically decreased due to insecurity problems.

Are the numbers unreal? Let’s analyze the situation of this important sector that represents 9% of the country’s GDP and more than 2 million direct jobs.

First, a clarification of terms. International travelers are foreign people that get into the country, no matter if they stay for a few hours or if they stay the night. Mexican Central Bank (BANXICO) records all those visits, meanwhile Tourism focuses only on the people that stay the night in the country, since they receive the definition of tourists.

This difference is important, especially on the borders where there is a very important flow of travelers that don’t stay the night, and therefore, they are not tourists.

BANXICO reports a fall in the total number of travelers in 2010, precisely because the border travelers that don’t stay the night had a significant decrease (7.8 million less than in 2009).

The groups considered as tourists (border travelers that stay the night and those that get beyond the borders) increased from 21.5 to 22.4 million. This confirms the increasing trend announced by Tourism, with a little different numbers (Tourism announced that they were 22.6 million). A 4.4% increase will always be good news, but we are just reaching 2008 levels.

Then, how is insecurity affecting tourism? Let’s see some data that can give us more clarity.

First result: world tourism increased 6.7% in 2010. Mexico is growing slower, therefore we had a relative decrease that makes us stay with a smaller piece of the world pie.

Second result: the country stopped receiving $230 million dollars on the border zone this year due to the fall of travelers. Besides, many hotels on different cities on the north zone reported occupancy levels of 40% during 2010, against 70% in 2009.

Third result: 3 cruises lines recently announced a reduction or elimination of their travels to Mexico. This sector, classified also as travelers and not as tourists, had an increase in 2010 and represents 8% of international travelers and 5% of foreign currency inflows.

Fourth result: United States, that represents 40% of foreign tourism in Mexico, has traveling alerts for half of the country’s states. This is a big red alert (fortunately, Queretaro is not on that list).

Are there good news? Yes. For instance, foreign currency inflows increased 5% in 2010 (every traveler and tourist spent more money on average). Also, the big national centers for international tourism (Cancun, Mayan Riviera, Cabos) are still outside the alert zones for the United States.

Although the perspectives were positive at the end of 2010, we can’t overlook current risks. We still may have an increase in the number of tourist in 2011 as a consequence of the world dynamic in this sector, but if we don’t have positive changes in the short term, the growing rate will be lower again, and tourists will concentrate more in a few destinations, that are already the ones more visited, at expense of the rest of the country.

	2007	2008	2009	2010	2011 (estimated on Dec. 2010)
International tourists (million)	21.4	22.6	21.5	22.4	22.6 Tourist National Confederation
					26.0 Ministry of Tourism

2007 to 2010 are data from BANXICO

A follow-up on Mexican consumer behavior

Extract of the article published on Plaza de Armas (http://www.plazadearmas.com.mx/), February 28^th 2011.

 This is a follow-up of my post published on November 16^th 2010.

At December 2010, retail sales had a 2.9% annual increase. The good news are that all the areas evaluated had an improvement during the year; the bad news are the existing gaps in different areas compared with 2008.

Dec. 2010 vs. June 2008 (Made with data from the Commercial establishments monthly survey, INEGI)
Retail establishments with growth		Retail establishments with decrease
Establishments	Change	Establishments	Change
Food, beverages and tobacco	13.8%	Home appliances, computers and articles for interiors decoration	-18.1%
Textile products, dressing accessories and footwear	6.9%	Motor vehicles, spare parts, fuel and lubricants	-11.6%
Supermarkets and department stores	4.6%	Stationery, recreation products and other personal-use products	-4.4%
Hardware and glass	1.7%	Health-care products	-4.1%

Although data shows improvement, consumers are still very sensitive to prices on their purchases. According to a study published by American Express, 68% of Mexicans make our purchases based on the cost (more than quality, and a lot more than the ecological impact of the products). This behavior is clearly identified by the big supermarket chains, as Walmart or Soriana, that are growing based on their low-investment and low-cost establishments (Bodega Aurrera Express, and Soriana Express).

The factor that Is having a clear influence on this behavior is employment. The national unemployment rate has been at levels of 4.9% to 5.7% on the last 6 months, way above the 2008 levels.

What is the outlook for 2011? There are three indicators that show a positive trend:

1. There are positive estimates of private consumption (where the families’ expense is included) according to International Monetary Fund (+4.7%) and Banco Santander (4.1%); that means it will be one of the motors for the estimated national economy growth.
2. Credit to consumers has had recently its biggest monthly increases in the last 3 years according to Central Bank (BANXICO) and the Banks and Securities National Commission (CNBV).
3. Consumer confidence is positive for 2011. TNS Research International identified in a recent study that optimism levels and intention to consume have increased for 2011. The confidence index calculated by INEGI had in January 2011 its second biggest level in the last 32 months, with good levels for those components that consider the economic perspectives for the next 12 months.

What are the risks? In the first instance, there are current inflationary pressures due to the increase on several commodities; the second risk is the slow rate in employment recovery we are having. Both issues can affect negatively the consumer’s behavior.

In brief, consumers begin to have more confidence and marginally more capacity to consume, what gives moderate growth perspectives with some uncertainties. Meanwhile, cost will be still an important factor in the purchasing decisions, so you will have to develop initiatives to reduce the cost of your product or service without compromising the basic quality elements that keep you competitive.

2010 Mexico’s GDP: recovery and current situation

I published this article on Plaza de Armas, newspaper from Queretaro, January 24^th 2011 (http://www.plazadearmas.com.mx/)

During December and January there have been different estimates about the economic growth for Mexico during 2010. These goes from 5% to 5.4%, all of them are figures that exceed the previous forecasts from different organizations.

Definitely, a year with this growth rate will always be good news; but it is also important to put it in context to clearly understand the country’s situation. According to INEGI, 2010 3^rdQ is still a little below the level we had prior to the world economic crisis (2008 1^stQ). That means we are just reaching the point we were three years ago!

 

Elaborated with data from INEGI

Base 100=2008 1st Q

This information could make us believe that 3 years later, we have finally overcome the economic crisis pot hole. However, let’s consider that although the production level is the same, we are now more Mexicans than 3 years ago (2 millions more according to INEGI). As a result, the GDP per capita of 2010 is still 2.8% below the 2008 1^stQ. The GDP per capita is used as a proxy for wages in a country; therefore, according to this perspective, we are still living the effects of the 2008 crisis.

¿What expectations are for 2011? Forecasts are that the growth will be between 3.6% and 4.8%. If forecasts come true, we will recover the same GDP per capita sometime during 2011.

Institution	2011 Forecast
CEPAL	Above 3.5%
World Bank	3.6%
Ministry of Economy	4%
UBS Brokerage	4.3%
Banamex	4.8%

We are having a positive perspective. True, the crisis will have 3.5 to 4 years to have a complete recovery if we consider the indicator of GDP per capita, but it is good to know that the fears of a double-dip have disappeared.

Mexico’s challenges are still on different areas: a weak domestic market; a huge exports concentration in the United States; the existence of different economic sectors with production levels below those of 2008; insecurity and its effect on the economy; financial and fiscal risks on different countries; uncertainty regarding the currency policies from emerging markets, etc. However, it is important to plan over the positive perspectives, and keep a track of these risks to respond opportunely. I agree with a statement from the United States Chamber of Commerce, let’s be “cautiously optimistic” and begin to design our companies’ strategies according to these encouraging scenarios.