Mexico’s annual GDP/person now stands at $16,463

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Sep 292014
 

Recent World Bank figures reveal that Mexico’s GDP/person in 2013 reached $16,463 a year, an increase in GDP/person of 1.8% since 2012. (All figures in US dollars). Mexico’s 2013 GDP/capita is well above the Latin America and Caribbean average of $14,978.

The GDP figures are based on purchasing power parity (PPP) which overcomes gross distortions resulting from differences in exchange rates. For example, a haircut of the exact same quality might cost $15 in the USA, $5 in Mexico and $1 in China. Using the PPP approach, this same haircut would count as a $15 contribution to the GDP of each of the three countries.

Mexico’s GDP/person has grown at an average rate of 4.5%/year since 1991, according to the World Bank. Back in 1991, the GDP/person averaged $6,320.

Mexico’s GDP/person has risen quite sharply since 2008, when the comparable figure was $14,810, though its world rank (#80) is essentially unchanged. The figures suggest that economic growth has outstripped population growth over the past five years, making Mexicans better off (on average), and able to afford more goods and services, now than they were then.

Since 1991, Mexico’s GDP/person has declined in only three years:

  • 1994-1995 – decline of 10% due to world economic crisis
  • 2000-2001 – decline of 0.2%
  • 2008-2009 – decline of 2.2% due to world economic crisis

These figures suggest that Mexico’s economy has become more resilient when there is any slump in global markets.

Mexico’s most valuable brands, 2014

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Jul 312014
 

Consultancy firm Interbrand México recently published its annual survey (2014) of the world’s 500 most valuable brands. The Mexican firms in the list are:

  • Telcel – cell phone service, valued at $5.8 billion (dollars),
  • Corona – principal product beer, valued at $4.3 billion
  • Telmex – fixed line telephone and internet service, valued at 3.6 billion
  • Oxxo – convenience stores, valued at 2.6 billion
  • Bimbo – bread and pastry products, valued at 2.4 billion

Compared to four years ago – Mexico’s most valuable brands (2010) -Banorte (finance and banking) and Claro (cell phone service) have dropped back, out of the top five, and have been replaced by Telmex and Oxxo

Note that these firms are not necessarily the largest firms in Mexico in terms of sales. Table 16.2 of chapter 19 of Geo-Mexico: the geography and dynamics of modern Mexico lists the ten largest Mexican private enterprises in 2008. Important aspects of several of these major firms are discussed in the chapters about manufacturing, construction and services, transportation, communications, etc.

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Country groupings: BRICs, EAGLEs and now MINTs

 Mexico's geography in the Press  Comments Off on Country groupings: BRICs, EAGLEs and now MINTs
Jun 122014
 

Economists have long suggested various sub-groupings of emerging markets. One of the most commonly used in geography is BRIC, an acronym formed from the initial letters of Brazil, Russia, India and China. The term BRIC was first coined by  Jim O’Neill in a 2001 paper entitled “The World Needs Better Economic BRICs”. The concept of BRICs has become outdated as the four countries’ economies have diverged over the past decade.

Next on the scene was the term EAGLEs to cover the world’s Emerging and Growth-Leading Economies. The advantage of this acronym is that it is not tied to specific countries. Any term comprised of country names is likely to date fairly quickly, and become much less useful. The members of the EAGLEs club are currently:

  • Brazil
  • China
  • Eqypt
  • India
  • Indonesia
  • Mexico
  • Russia
  • South Korea
  • Taiwan
  • Turkey

Combined, these ten EAGLEs are  expected to account for 50% of all global growth that occurs over the next 10 years.

The four MINT countries

The four MINT countries

Jim O’Neill has recently popularized another contribution to the terminology of countries believed to be emerging market giants: MINTs. The term was originally coined by Fidelity Investments. The four members of this exclusive grouping are:

  • Indonesia
  • Mexico
  • Nigeria
  • Turkey

In proposing the new grouping, O’Neill makes a compelling case for Mexico’s future economic success. First, its large population ensures a viable domestic market. It also has a growing middle class and a steadily improving dependency ratio (the number of working age people compared to those not working). In addition, Mexico has a privileged position in world trade, linking North America to Asian markets. O’Neill believes that Mexico could experience double-digit rates of economic growth in the coming years, with GDP/person rising from its current figure of about 11,000 dollars to 48,000 dollars by 2050.

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Remittances fell 3.75% in 2013 but look set to rise in 2014

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Feb 062014
 

Figures from Mexico’s central bank (Banco de México) show that the value of remittances sent home by Mexicans working in the USA fell 3.75% in 2013, compared to the previous year.

Annual remittance totals in billions of dollars:

  • 2013 – 21.596
  • 2012 – 22.438
  • 2011 – 22.802
  • 2010 – 21.303

Trends in remittance payments are closely linked to trends in the US economy, so the slight fall in the past two years is no great surprise, as the US economy struggles to regain growth following the 2008 financial crisis.

There are some positive signs. Despite the decline over the year as a whole, the month of December saw remittances entering Mexico of 1.8 billion dollars, higher than any December since 2007.

In the last quarter of 2013, remittance payments were 3.46% higher than for the same period in 2012 (mainly due to a higher number of remittance payments), suggesting that remittance payments may now be on the rise again. The average amount remitted during the last quarter of 2013 was 285.34 dollars, 3.8% less than the average for the equivalent period in 2012.

Note: These remittance figures quantify only remittances sent via “formal” channels such as banks, and do not include informal payments carried directly back to Mexico by family or friends.

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Mexico’s Pemex is one of the most competitive oil firms in the world

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Dec 022013
 

Despite the criticisms regularly leveled at it, Mexico’s oil giant Pemex is actually one of the most competitive oil firms in the world.

First, its costs of exploration and production are much lower than those of most other major oil companies. Pemex’s production costs in 2012 averaged 6.84 dollars/barrel (d/b) of oil equivalent, well below the costs incurred by international rivals Exxon (9.91 d/b), Chevron (15.16), Total (8.17), Shell (12.47) and British Petroleum (12.50).

pemexPemex’s exploration and development costs are also among the world’s lowest. They fell from 16.13 d/b in 2011 to 13.77 d/b in 2012, mainly due to the discovery of several new reserves. Among major players, only Shell had lower costs (11.75 d/b), with Pemex well ahead of British Petroleum (17.37 d/b), Exxon (19.31), Total (22.68) and Chevron (28.81).

Thirdly, as new fields are fully explored, Mexico’s proven oil reserves are expected to continue to rise for a number of years, from the current level of 13.87 billion barrels to 14.92 billion barrels by 2018. (During this period, Pemex will extract an estimated 6.64 billion barrels, but they will be more than replaced by anticipated new discoveries)

How important is Pemex to the Mexican economy?

One third of Mexico’s national budget comes from the petro industry, which accounted for 7.6% of GDP in 2012.

In 2012, Pemex invested 23.9 billion dollars in Mexico, appreciably more than the 19.2 billion dollars invested that year by América Móvil, Femsa, Walmart, Frisco, Cemex, Liverpool, Alfa and Mexichem, combined.

In terms of revenues, Pemex had revenues in 2012 of 142.4 billion dollars, greater than the 139.1 billion dollars in revenues of América Móvil, WalMart, Femsa, Alfa and Cemex combined.

According to a Bloomberg analysis, between 1973 and 2012, Pemex generated a cash flow (before tax and depreciation) that was 63% higher than the total cash flow of all the firms listed on the Mexican Stock Market. In 2012, the Ebitda (Earnings before Interest, Tax, Depreciation and Amortization) of Pemex was 88.2 billion dolalrs, compared to the combined 54.2 billion dolalrs of Ebitda for América Móvil, Banorte, Femsa, Walmart de México, Grupo Modelo, Cemex, Kof, Televisa, Peñoles and Alfa.

How important is Pemex in the worldwide picture?

According to Petroleum Intelligence Weekly, U.S. Energy Information Administration and U.S. Crude Oil Imports by Country, Pemex is one of the world’s five most important crude oil producers, after Aramco (Sauid Arabia), NIOC (Iran), CNPC (China) and KPC (Kuwait).

Pemex is the third largest oil exporter to the USA, after Canada and Saudi Arabia, but ahead of Venezuela and Nigeria.

Pemex installations in Mexico. (Adapted from Fig 15.5 of Geo-Mexico). All rights reserved.

Pemex installations in Mexico. (Adapted from Fig 15.5 of Geo-Mexico). All rights reserved.

Mexico has the world’s 13th largest crude oil reserves and Pemex has the world’s 15th highest oil company revenues.

Mexico’s proposed energy reforms, which will allow private sector firms more access to some parts of the oil and gas sector, will only serve to boost the competitiveness of Mexico’s oil industry. The major problems facing Pemex are not directly related to revenues or to competitiveness, but are the persistence of corruption and a lack of transparency.

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How does Mexico’s unemployment rate compare to that of other countries?

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Nov 212013
 

In a recent post, we looked at The pattern of unemployment in Mexico in 2013 and saw how states in northern Mexico have significantly higher unemployment rates than most of southern Mexico. In this post we consider international comparisons. How does the rate of unemployment in Mexico compare to the rates in other countries?

The OECD (Organisation for Economic Co-operation and Development) publishes harmonised unemployment rates for its 31 member countries. The OECD calculates Mexico’s harmonised unemployment rate for the third quarter of 2013 at 4.9%. This is quite encouraging, since the average for OECD countries is 7.9%. (Note that these figures do not include “underemployment”.) Mexico’s unemployment rate is more favorable than that of its NAFTA partners, Canada (currently 7.1%) and the USA (7.6%).

The OECD members with the highest unemployment rates are Greece (27.4%), Spain (26.6%),, Portugal (16.4%), the Slovak Republic (14.0%) and Ireland (13.8%).

Among OECD members, only South Korea (3.1%)  Japan (4.0%) and Austria (4.1%) have a lower harmonised unemployment rate than Mexico.

 

The pattern of unemployment in Mexico in 2013

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Nov 182013
 

The accuracy of Mexico’s unemployment statistics is frequently questioned in the media but INEGI, Mexico’s National Geography, Statistics and Information Institute, uses internationally accepted methods to compute various different unemployment indices. As in most countries, INEGI surveys are based on samples in urban areas, involving 80,000 interviews in more than 30 towns and cities.

The International Labour Organization defines “unemployed workers” as those members of the workforce currently not working but willing and able to work, who have actively sought work in the past four weeks. Note that the mere act of looking at newspaper or online ads is not considered sufficient evidence of “actively seeking work”.

Mexico’s economically active population in the third quarter of 2013 was 52.3 million people, a very slight (0.01%) increase on the comparable figure for 2012.  The figure represents 59% of the total population aged 14 and over.

INEGI statistics show that the under-employed population was 8.5% of all those with jobs. The unemployed population was 2.7 million, 5.2% of the workforce.

Mexico’s workforce is not gender-independent. 77 out of every 100 men are economically active, compared to only 43 of every 100 women. The workforce can be subdivided between primary occupations (6.8 million, 13.8% of the total workforce); secondary occupations (11.9 million, 24%) and the tertiary or services sector (30.6 million, 61.6% of  workforce), with the remaining 0.6% undeclared.

Map of unemployment rates

Unemployment in Mexico, third quarter of 2013. Cartography: Tony Burton; all rights reserved

Out-migration from several southern and western states has significantly reduced unemployment. Several southern states are among those with the lowest unemployment rates in the entire country.

The highest rates of unemployment are mainly in northern Mexico, parts of which have seen on-going violence in the war against drugs. Workers flocked to these areas during the boom times of Mexico’s maquiladora program when firms were encouraged to set up “in-bond” factories in these states, enjoying the freedom to import components and export finished products. However, the slow recovery of the US economy has reduced demand for consumer products and many maquiladora factories have reduced their workforce, leading to intense competition for available jobs and a higher rate of unemployment.

What other factors influence unemployment and help explain the patterns shown by the map?

This post describes the spatial pattern of unemployment in the third quarter of 2013. By way of comparison with 2010, see

Mexico’s economy and workforce are analyzed in chapters 14 to 20 of Geo-Mexico: the geography and dynamics of modern Mexico. Ask your library to buy a copy of this handy reference guide to all aspects of Mexico’s geography today! Better yet, order your own copy…

Several major Mexican companies among the “Global Challengers”

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Apr 192013
 

The Boston Consulting Group (BCG) periodically identifies 100 companies from rapidly developing economies as “global challengers.” (Bcgperspectives, “Introducing the 2013 BCG Global Challengers“).

BCG has identified 100 companies for this list in 2006, 2008, 2009, 2011 and 2013. They focus on companies in developing Asia (excluding Japan, South Korea, Taiwan, Hong Kong and Singapore), Eastern Europe, the Commonwealth of Independent States, the Middle East, Latin America, and Africa. Companies considered for the list must have annual revenues of at least $1 billion, overseas revenues at least 10% of total revenues or $500 million, and be focused on building a truly global footprint.

The biggest emerging economies have dominated. In 2006 the list included 44 Chinese companies, 21 Indian companies and 12 from Brazil. Russia was next with seven followed by Mexico with six. The dominance of the big three declined from 77 in 2006 to 63 in 2013. One reason for this is that some of the countries on the list “graduated” from the challengers list to become full global competitors.

In 2013, China led with 30 companies, followed by India with 20 and Brazil with 13. Mexico was 4th with seven companies, followed by Russia with six, South Africa with five, Thailand with four and Turkey with three. Countries with two companies on the list are Chile, Malaysia, and Saudi Arabia. Those with one company on the list are Argentina, Colombia, Egypt, Qatar and United Arab Emirates.

The seven Mexican companies in the group are Alfa, American Movil, FEMSA, Gruma, Grupo Bimbo, Mabe, and Mexichem. One Mexican company, Cemex, has “graduated” from the “challengers” list. It is the world’s largest building materials supplier and 3rd largest cement maker. Cemex now operates in 50 countries on six continents and is the leading cement seller in the USA. Revenues in 2012 were $15 billion.

ALFA is the world’s leading manufacturer of high-tech aluminum engine heads and blocks through its subsidiary Nemak. Its other major subsidiaries are Alpek (petrochemicals), Sigma Alimntos (foods) and Alestra (electronics and telecommunications). Revenues in 2012 were $15 billion.

América Móvil. operates Telmex and Telcel, the world’s fourth largest cell phone operator with 160,000 employees and over 250 million subscribers mostly in Latin America and the USA. Its revenues in 2012 were $59 billion. It is a candidate to graduate from this “challengers” group in the near future.

Gruma is the world’s largest producer of corn flour and tortillas. It has subsidiaries in the USA, China, UK, and Latin America. Revenues in 2012 were $5 billion.

FEMSA, based in Monterrey, is the world’s largest bottler of Coca-Cola. FEMSA also operates OXXO, the largest convenience store chain in Latin America. Revenues in 2012 were $18 billion.

Grupo Bimbo is the world’s largest bread maker and the biggest bread seller in the USA. Among its 100 brands are Arnold’s, Entenmann’s, Thomas’s English Muffins, and Sara Lee fresh baked products. Bimbo is the world’s 4th largest food company behind only Nestle, Kraft, and Unilever. Revenues in 2012 were $13 billion.

Mabe. is a leader in the production of large household appliances such as stoves, refrigerators, washers, dryers, etc. These are sold in 70 countries under the General Electric and Mabe brand names. It controls 70% of the market in Latin America. Revenues in 2012 were $4 billion.

Mexichem is a chemical company that operates throughout the Americas as well as in Europe and Asia. It exports to more than 50 countries, has over 10,000 employees, and earns over $4 billion annually.

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Mexico seen as the “Flavor of the Month” among Latin American Economies

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Apr 062013
 

In a presentation entitled “Mexico’s Outlook” in Ajijic, Jalisco, Mexico, on 20 March 2013, noted Mexican political economist Leo Zuckermann explained how many economists see Mexico as the “flavor of the month” among Latin American economies.  Brazil previously was the star of Latin America as evidenced by the 14-20 November 2009 cover of  The Economist. However, Brazil’s performance slowed considerably in 2012; its GDP grew by only 1.0% and the dollar value of its stock market actually declined by 0.5% in 2012. (The Economist, 19 January 2013, p 93)

Economist covers

Mexico is the new star according to The Economist 14-page Special Report on Mexico in its 24-30 November 2012 edition. Mexico’s GDP grew by 4.0% in 2012, faster than the US, Canada and all European economies, though it did trail China (7.7%), India (5.4%), Indonesia (6.3%) and Thailand (5.8%). In dollar terms its stock market shot up an impressive 33.6% in 2012, tied with Germany and faster than all other sizable countries, except Turkey (75.8%), Thailand (45.9%) and Egypt (43.9%). (The Economist, 19 January 2013, pp 92, 93).

Mexico is expected to grow by 3.5% in 2013. However, it should be noted that after appearing on The Economist cover in November 2009, Brazil’s GDP declined steadily from over 8% to only 1%. We hope that Mexico can avoid this Economist cover jinx.

Mexico’s recent growth and positive outlook is largely dependent on continued expansion of exports, particularly the sale of automobiles and electronics to the USA. In 2013, Mexico is expected to surpass Japan as the leading exporter of light vehicles into the USA.

Though Mexican industrial export numbers are impressive, many of the components of these exports are initially imported. For example, the foreign content of Mexico’s electronic exports is 61%, compared to about 40% for China, 45% for Korea and only 11% for the USA.

Much of Mexico’s export capacity results from foreign direct investment in Mexico. However, such investment declined from nearly $30 billion a year in 2007 and 2008 to only $12.7 billion in 2012 (The Economist, 19 January 2013, pp 92, 93). This could limit export growth in future years. Furthermore Mexican direct investment abroad in 2012 was $25.5 billion almost twice the amount foreigners invested in Mexico. Prior to 2012 foreigners invested far more in Mexico than vice versa. This trend suggests that many Mexican investors see better opportunities abroad than in Mexico. Such investments are one reason for the rapid foreign expansion of some major Mexican multinational corporations such as Cemex, América Móvil, FEMSA and Bimbo. Another factor suggested by these numbers is that both foreign and Mexican investors do not see many attractive opportunities for domestic industries selling to the Mexican market. If Mexico is indeed now the “flavor of the month,” it remains to be seen if Mexico can retain its current popularity.

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The world’s richest man is one of 15 Mexican billionaires on 2013 Forbes list

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Mar 072013
 

The 2013 Forbes list of the world’s billionaires shows that the world’s 1,426 billionaires (an all-time high) share a record net worth of $5.4 trillion. The four countries with most billionaires are the USA (442), China (122), Russia (110) and Germany (58).

Fifteen Mexican individuals or families make the 2013 list, also a record number. The fifteen super-rich Mexicans are:

World rank / Name / Estimated wealth according to Forbes / Main business interests

#1 Carlos Slim Helú and family, $73.0 billion, making him the richest man in the world. Fixed line telephone provider Telmex, cell phone provider América Móvil, Grupo Carso, Inbursa. [Slim Helú remains the world’s richest man for the fourth consecutive year]

#32 Alberto Bailleres González and family, $18.2 billion. Mining giant Peñoles, department store El Palacio de Hierro and Grupo Profuturo.

#40 Germán Larrea Mota Velasco and family, $16.7 billion. Grupo México –mining for copper and other minerals, railways.

#111 Ricardo Salinas Pliego and family, $9.9 billion. Television company Televisón Azteca, domestic appliance store Elektra, bank Banco Azteca, and cell phone company Iusacell.

#179 Eva Gonda Rivera and family, $6.6 billion, soft drinks (FEMSA)

#248 Maria Asunción Aramburuzabala and family, $5 billion, beer (Grupo Modelo)

#329 Jerónimo Arango and family, 4 billion dollars. Founder of Aurrerá supermarket chain and Grupo Cifra which controlled VIPS and El Portón restaurant chains, Suburbia department stores and tourist developments in Baja California Peninsula and Acapulco

#589 Emilio Azcárraga, $2.5 billion. Television and media conglomerate Televisa, and Nextel cell phones

#613 Rufino Vigil González, $2.4 billion; steel (Industrias CH)

#641 José and Francisco Calderón Rojas (brothers), $2.3 billion, beverages (Coca-Cola Femsa)

#792 Carlos Hank Rhon and family, $1.9 billion, banking

#831 Roberto Hernández, $1.8 billion. Banker, one of main shareholders of Citigroup, and tourist developments in the Yucatán Peninsula

#974 Alfredo Harp Helú and family, $1.5 billion. Shareholder in Citibank, telecommunications firm Avantel

#1031 Max Michel Suberville, $1.4 billion, retail (Coca-Cola Femsa)

#1107 Juan Gallardo Thurlow, $1.3 billion, beverages (organización Cultiba)

Conspicuous by his absence from the list (for the first time in several years) is Joaquín Guzmán Loera (aka “El Chapo”) who Forbes has consistently claimed has a net worth of about $1 billion, but whose assets the magazine now declares “impossible to verify”. Guzmán Loera is Mexico’s most wanted man, head of the Sinaloa drugs cartel, the main supplier of cocaine to the US market.

The combined total wealth of these fifteen individuals is a staggering $148.5 billion (compared to an equivalent total of $125.1 billion in 2012). The 2013 figure is equivalent to more than 6% of Mexico’s GDP.

The average earnings of Mexican workers registered in IMSS (Mexico’s Social Security Institute) in 2012 was about 260 pesos ($20 dollars) a day. The combined wealth of Mexico’s fifteen richest individuals/families is therefore equivalent to the total annual salaries of more than 20 million Mexicans earning this average salary! Note that this equivalence has risen steadily over recent years. For example, in 2010 the combined wealth of Mexican billionaires was equivalent to “only” 14.3 million Mexicans earning the then average salary.

Clearly, there are a handful of extremely wealthy individuals living in Mexico, alongside millions of Mexicans who are living at or below the poverty line. These income disparities have existed for a very long time, and are examined in detail in chapter 14 of Geo-Mexico: the geography and dynamics of modern Mexico. That chapter also analyzes the spatial patterns of wealth in Mexico, and discusses whether the gap between rich and poor has widened or narrowed in recent years.

Chapter 29 discusses Gender inequities in Mexico and  Oportunidades, a poverty reduction program (links are to excerpts from that chapter).

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