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Spotlight on Reforms in Mexico

Mexico has recently risen to a prominent place on many investors’ radar screens. If its transformation is successful, Mexico might prove itself the best investment opportunity of the moment.

Emerging markets have been rightly criticized for squandering favorable global conditions by not taking decisive steps to guarantee their long-term economic health. Mexico has been a gratifying exception to the rule.

Under the helm of President Enrique Peña Nieto, the second-largest economy in Latin America has implemented an impressive number of structural reforms that have lifted the image of the country in the eyes of international investors. Areas that seemed out of reach for political leaders, such as the oil sector, the education system, competition and labor laws, are going through significant changes that could help Mexico realize its potential. Although GDP growth was mediocre in 2013, international markets seem to have realized that much of the groundwork has been laid for a brighter future. 

Today, Mexico’s fiscal position is solid, unemployment is low and the economy has gained in competitiveness against rivals such as China. The proximity to the giant US market is a natural advantage enhanced by membership of the North American Free Trade Area and large reserves of oil. Mexico has also been able to diversify its economy, exporting a growing volume of non-oil products to different parts of the world. As domestic hurdles to development are reduced, there are reasons for optimism about the country. 

The opportunities presented by the Mexican economy are outlined in this report, together with certain challenges and risks that Mexico still faces on its road to prosperity. After all, enough inefficiencies remain in the economy for things to go wrong if the government falters in its reformist zeal. But the reforms proposed so far should make Mexico an increasingly interesting destination for investors. A revamped energy sector and a demonstrated need for more infrastructure investment are just a couple of the areas where opportunities could be found in a country that promises soon to be a different and brighter place.

This White & Case report discusses how reforms in the country are opening the economy to investment and considers the opportunities and challenges that lie ahead.


To read the full report please click here.


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