Sapa-AFP Mexico City
HERE’S a bold prediction for 2022, the year of another soccer World Cup: Mexico will beat Brazil.
While soccer-mad Mexicans dream of defeating their regional rivals for the ultimate trophy, some analysts say 2022 may actually be the year when Mexico dribbles past Brazil to become Latin America’s biggest economy.
And Brazil is not the only global powerhouse that Mexico is challenging. China’s rising wages are making Mexico an increasingly attractive location for manufacturers, who are flocking there despite a relentless drug war.
The country’s rising fortune has inspired a series of optimistic notes by analysts from some of the world’s biggest financial firms.
“We forecast that Mexico may overtake Brazil as the number one economy in Latin America as early as 2022, on the back of strong growth in human capital and total factor productivity,” Nomura Group analysts wrote in August.
Barclays analyst Marco Oviedo wrote early last month that, after lagging Brazilian manufacturing exports for a decade, Mexico took the lead after 2008-2009. “We believe this change is likely to be structural and persistent,” Oviedo said.
Mexico posted growth of 3.9 percent last year and the central bank is forecasting growth of as much as 4.25 percent this year. Brazil’s growth slowed to 2.7 percent last year, while a mere 1.6 percent is forecast for this year.
Brazil’s slowdown came after it enjoyed a “golden decade” fuelled by China’s appetite for commodities following the Asian giant’s entry into the World Trade Organisation in 2001, Nomura said in a note in May.
Mexico, meanwhile, is at “the dawn of a new era” as more and more manufacturers set up shop there due to China’s growing labour costs, the Japnese-based financial firm added.
The Boston Consulting Group, a global management consulting firm, says it could already be cheaper to produce in Mexico than in China.
“We believe that this year… the costs of producing in Mexico are the same or lower than the costs of producing in China,” Boston Consulting Group senior partner Hal Sirkin said.
This year alone, Nissan, Ford and BMW have announced plans to open new factories or increase production in Mexico.