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The case for continued manufacturing investment in Mexico is made by Sergio Sarmiento at The Offshore Group's annual Manufacturing in Mexico Summit For more information please visit /nwww.offshoregroup.com
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Mexico at a Glance The Offshore Group, Inc. www.offshoregroup.com
In a turbulent world, Mexico becomes an unexpected opportunity The Offshore Group, Inc. www.offshoregroup.com
Mexico’s edge • Natural resources • 2,000-mile border with the U.S. • Free-trade agreements • 8,000-mile coasts • A growing, young population The Offshore Group, Inc. www.offshoregroup.com
The U.S. and the world have suffered in 2008 the worst financial crisis since 1929 The Offshore Group, Inc. www.offshoregroup.com
Reasons for U.S. crisis Expansion of credit Lack of savings Budget deficit Current-account deficit The Offshore Group, Inc. www.offshoregroup.com
U.S. consumers have had a negative or extremely low savings rate for years The Offshore Group, Inc. www.offshoregroup.com
Factors for low savings rate Negative interest rates Tax breaks for home purchases Stock market boom Housing boompolíticos The Offshore Group, Inc. www.offshoregroup.com
Not only consumers…. The U.S. government has also spent beyond its means The Offshore Group, Inc. www.offshoregroup.com
U.S. budget deficit Mexican budget deficit • 2007 0 • 2008 0 • 2009 1.8 U.S. budget deficit • 2007 1.2 • 2008 3.2 • 2009 12 % of GDP The Offshore Group, Inc. www.offshoregroup.com
U.S.S federal public debt Year $bn % of GDP • 1980 980 33.3 • 1990 3,233 55.9 • 2000 5,674 58 • 2009 10,024 72.5 (est) The Offshore Group, Inc. www.offshoregroup.com
Mexican federal public debt Year % of GDP • 1990 45.1 • 2000 19 • 2008 15 (est.) The Offshore Group, Inc. www.offshoregroup.com
Budget deficits Mexico’s budget deficit in 2009 will be a consequence of increased investment in infrastructure The U.S.’s budget deficit in 2009 will be a consequence of the recue of the banking system The Offshore Group, Inc. www.offshoregroup.com
Mexico is better prepared than many countries for the present financial crisis The Offshore Group, Inc. www.offshoregroup.com
Mexico’s strengths • Reduced budget deficit • Low public debt • Healthy banks • Proximity to U.S. market The Offshore Group, Inc. www.offshoregroup.com
Infrastructure • Mexico has serious infrastructure problems, but they are largely confined to the south • Northern Mexico is well connected with U.S. market The Offshore Group, Inc. www.offshoregroup.com
Mexico still needs internal reforms • Energy • Fiscal • Labor • Education • Justice • And so on The Offshore Group, Inc. www.offshoregroup.com
These reforms would make the country far more competitive The Offshore Group, Inc. www.offshoregroup.com
A recession in the U.S. will affect Mexico…. …. and the rest of the world The Offshore Group, Inc. www.offshoregroup.com
But Mexico remains a good bet for companies that want to be well positioned when the eventual recovery comes The Offshore Group, Inc. www.offshoregroup.com