The Mexican economy is continuing to grow, recovering from the peso crisis that struck the country in December 1994. As a result, growth projections for 1997 are positive. The government of Mexico anticipates a gross domestic product (GDP) growth rate of 4 percent this year. According to the Mexico Consensus Economic Forecast of Arizona State University, private growth estimates range from 3.7 percent to 4.8 percent, averaging 4.3%.

Mexican Sectors Are Registering Sound Growth

Many Mexican sectors registered sound growth through 1996 and are continuing to expand. The Mexican manufacturing industry, for example, registered strong growth last year, led by the automotive sector, textiles, and the basic metals sector.

The transport and telecommunications sector also demonstrated upward trends, especially during the second quarter of last year. Financial services began to come alive during the April - June period, although banks and debtors continue to incur problems that drag the sector down. And commerce and construction both picked up in the second quarter, a sign that domestic demand is recuperating.

U.S. State's Export Growth Is Positive and Diverse

The growing Mexican economy, combined with tariff reductions and other benefits derived from NAFTA, have resulted in a healthy increase in U.S. exports there. Thus, U.S. exports to Mexico increased 22 percent in the first nine months of 1996, compared to the same period in 1995. This follows increases of 12.1 percent and 18.6 percent in the first and second quarters of 1996, respectively.

According to the Massachusetts Institute for Social and Economic Research (MISER), forty out of fifty U.S. states experienced growth in exports to Mexico in the third quarter of 1996, compared to the same period in 1995. This is good for U.S. exporters and workers.

The border states experienced very strong growth in exports to Mexico. In the third quarter of 1996, Texas exports reached almost $7 billion, a 25.1 percent increase compared to the same period in 1995. And California followed with a jump of 24 percent, reaching $2.3 billion.

In the South, Alabama's exports grew by 115.2 percent, South Carolina's exports rose by 37.5 percent, and Louisiana incurred an increase of 63.1 percent. In the Pacific and Rocky Mountain region, Oregon's exports to Mexico rose by 13.4 percent, Colorado's jumped by an impressive 102.3 percent, and Washington state's increased by 11 percent. In the Northeast, Pennsylvania's exports to Mexico shot up by a whopping 152.1 percent, New York's rose by 21.3 percent, and Massachusetts incurred an export growth rate of 54.9 percent.

26 of 31 U.S. Sectors Experienced Export Growth

Of the 31 industrial sectors classified by MISER, 26 experienced growth in exports to Mexico in the third quarter of 1996, compared to the same period in 1995.

The U.S. electronics sector, for example, incurred a 19.2 percent rise in exports to Mexico. Industrial machinery exports increased by 12.4 percent, transportation equipment expanded by 8.1 percent, textile products and apparel rose by 24.1 percent, and chemical exports jumped by 22.8 percent.

U.S. agricultural exports to Mexico also experienced sound growth, with some sectors performing exceptionally well. Third-quarter exports of crops rose 95.3 percent — rising from $1.27 billion in the third quarter of 1995 to $2.48 billion in the third quarter of last year. And livestock sales rose 134.6 percent, reaching $56.5 million. Overall, agricultural exports increased by just short of 19 percent.

The North-South Relationship Remains Strong

Trade between the United States and Mexico continues to remain healthy. It is estimated that total U.S. exports of goods and services to Mexico last year reached approximately $60 billion. Mexican exports to the United States are estimated at about $72 billion. As trade increase and U.S. and Mexican firm continue to establish partnerships, companies on both sides of the border will continue to benefit, and will become increasingly competitive compared to European and East Asian competitors.

The U.S.-Mexican relationship is further strengthened by Mexican President Ernesto Zedillo's recent announcement that his government will be paying off the remainder of the U.S. financial rescue loan — three years ahead of schedule. This not only enhances our political relationship, but also improves the level of confidence in Mexico's economy.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




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