Monitoring the World Economy,Economic Outlook

1. THE GLOBAL COMPETITIVNESS

2. Integration is the Future.
The Picture.
Source: World Economic Forum.
The Global Competitiveness
Index: Basic Requirements.
Some facts: The market, the economy

3. Industrial redistribution
US Imports
Market Share
Source: USDOC

4. Exports as a Growth Driver
US Non-petrol Imports
Market share
(January-August 2010)
Source: USDOC
Source: World Bank

5. Integration is the Future
The Picture

6. Strong recovery and macroeconomic stability
Macroeconomic Environment 2010-2011
(Score and Ranking)
Emerging market overheating index, 2011
0
Argentina
Brazil
Hong Kong
India
Indonesia
Turkey
Vietnam
Singapore
Thailand
Egypt
Peru
Philippines
Chile
China
Colombia
Poland
Saudi Arabia
South Korea
Venezuela
Russia
South Africa
Czech Republic
Mexico
Pakistan
Taiwan
Malaysia
Hungary
Source: World Economic Forum. The Global Competitiveness Index: Basic
Requirements. 139 economies are considered.
Source: The Economist
20
40
60
80 100

7. Looking for reasons?
Despite the perceived economic slowdown in
the World …
Mexico is in a situation less vulnerable than
other countries
Y
With a budget deficit of under 3% of GDP
and a total public debt of less than 40%
Mexico would meet the Maastricht criteria!
Source: Countries' Central Banks and National Statistics Offices, JP Morgan and Global Competitiveness Report 2009

8. Household expenditures
Expenditure of households on goods and
services for individual consumption
(USD, 2008)
Forecasted growth of middle income households 1
(%, 2010-2015)
Although income levels in
Mexico are similar to those in
emerging economies, the
level of household
consumption is higher.
Source: Own estimations based on data from Global Purchasing Power Parities and Real
Expenditures, 2005 International Comparison Program - World Bank (2008)
1/The original data are for 2005 and the estimations for 2008 were made using the observed
growth rates from those countries.
Source: Own estimations based on ata from Winning in Emerging-Market Cities, Boston
Consulting Group (2010).
1/ Middle income households are those with annual income over $10,000 dlls.

9. Projected average annual GDP growth rate (% 2009-2050)
In the long run,
developing countries
outpace G20 advanced
economies
Source: AT Kearney, 2010

10. GDP outlook
Gross Domestic Product
(Billion Dollars)
2010
Source: Goldman Sachs. The N-11: More Than an Acronym. Global Economics Paper No: 153. March, 2007.
1/ Estimaciones de Goldman Sachs
5th place
11th place
It is estimated that by
2050, Mexico will become
the fifth largest economy
and its GDP per capita
GDP per capita
will be comparable with
(US Dollars)
2006
2010
those of developed
countries.
20501
20501

11. Competitiveness: market access
Trade facilitation indicators:
Trading across borders rank
Mexico's rank (WEF market access sub index)
= improvement
Source: Doing bussiness
Source: World Economic Forum 2010

12. Deregulation advances
Reduction of norms in Federal Government
(number)
Time to open a business
(days)
70
60
58
58
58
50
40
27
30
27
20
28
13
10
9
0
2004
Source: Ministry of Public Function
Source: World Bank
2005 2006
2007 2008
Source: Doing Business 2011, World Bank.
2009 2010 2011

13. Foreign Trade?
This speaks for itself

14. Trade and legal frameworks
North America: the
competitiveness agenda
X: 84.2%
M: 51.1%
Europe: seize opportunities
and deepen FTAs
X: 5.3%
M: 12.6%
X: 3.3%
M: 30.8%
Latin America: promote
regional integration
X: 6.6%
M: 4.6%
Asia: selective and
ad hoc approach
Presence in forae: ( WTO, APEC, OECD, LAIA)

15. Mexico’s Trade Balance 2011
EUROPEAN UNION: -$18 billion USD
NAFTA: +$101 billion USD
ASIA: -$92 billion USD
OTHERS*: -$3 billion
LATIN AMERICA: +$11 billion
*Includes Africa, Oceania and other European countries
Source: 2011 Data. Mexico’s Central Bank and Global Trade Atlas.

16. Mexico is, in a nut shell
A big market
The Mexican economy has a GDP of
roughly 1 trillion dollars, with a population
of 112 million. The country’s GDP is
expected to reach 1.4 Mexicodollars in 2015 trade hub
Manufacturing costs: trillion has a
…a
(IMF). cost advantage of 18.2%
business Mexico has 11 FTAs covering 43 countries, which
represents more than 60% of world GDP.
average (of 17 industries) relative to
the US (Source: Alix Partners 2009).
Mexico enjoys macroeconomic
… cost efficient
stability, responsibly managed
state finances and is pushing
reforms to further improve the
business environment
… and stable!

17. Demography is destiny (2030)

18. Attractive FDI destination
Competitive advantages
1. Geographic Location
Large U.S. border and coast both at the Pacific and Atlantic
Oceans and easy access to South America
2. Preferential access to
foreign markets
11 FTAs with 43 countries and an approved legal framework
with major trading partners
3. Skilled and competitive
labour force
Skilled workforce at relatively low cost, managerial skills and
cultural affinity
4. Demographic window
In the next three decades, the number of economic
dependents will reach a record minimum (2025)

19. Foreign direct investment inflows per capita (1990-2009)
Facts:
•BRICS get all the talk
•In spite of the hype, Mexico gets at least as much per capita FDI as they do
Source: Global Insight

20. Mexico is well positioned
Russia
India
China
B
COUNTRY
Brazil
R
I
C
Mexico Indonesia
M
I
South
Korea
S
Turkey
T
1. Macroeconomic environment
2. Open economy
3. Economic complexity
4. Total manufacturing cost
5. Domestic market
6. Demography
7. Workforce quality
8. Engineering graduates (per capita)
9. Democratic system
10. Human Development Index
Equal or above Mexico
Below Mexico, but close
Clearly under Mexico
Source: 1. Macroeconomic Environment: WEF The Global Competitiveness Report 2011-2012, Macroeconomic Environment/ 2. Open Economy: Doing Business
2012, Ease of Doing Business/ 3. Economic Sophistication: The Atlas of Economic Complexity, Harvard University/ 4. Total Manufacturing Cost, Manufacturing
Outsourcing Cost Index, Alix Partners/ 5. Domestic Market: WEF The Global Competitiveness Report 2011-2012, Domestic Market Size Index/ 6. Demographic
Bonus: UN World Population Prospects. The 2010 Revision. Forecast of total dependency rate in 2025 (population <15 & 65+ years) (15-64)/ 7. Labor availability and
quality of the DFI Benchmark, Automotive OEM, Skills, attitudes and productivity/ 8. Engineering Graduates (per capita): UNESCO Institute for Statistics,
International Monetary Fund. Engineering, manufacturing and construction graduates per capita 2009/ 9. Democratic System: The Economist, Democracy Index
20
2011/ 10. Human Development Index: UN, Human Development Index.

21. Currency stability = risk mitigation
RISK
Expected Real Exchange Rate variation (2008-2012)
Buy and manufacture
where you intend
Natural Hedging
to sell
Source: Global Insight

22. After NAFTA? Automotive leads the way

23. Proof: what Volkswagen is doing
Source: Volkswagen de México

24. This is not due to chance

25. Mexico´s place in the automotive industry (2011)
5th
Exporter of light vehicles
(2.14 million units) 1
8th
World´s largest vehicle producer
(2.69 million units) 1
8th
World wide producer of
light vehicles (2.55 million
units)
6th
6th
Exporter of commercial vehicles*
(95,175 units) 2
World wide producer of
commercial vehicles (136,678
units) 2
Occupied workers4:
68,895
19 of the top leading
automakers are located
in 15 states of Mexico.
The automotive industry in
Mexico accounts for:
6% of the Foreign Direct Investment (FDI)
in the country3
4% of the national GDP 4
20% of the manufacturing GDP 4
1
Source AMIA
23% of Mexican total exports 5
2
Source: OICA
3
Source: Ministry of Economics 4 Source: INEGI
5
Source: Business Monitor International
States with
automotive
production

26. Aerospace
Highest investment attraction in
aerospace manufacturing during the last
decade.
6th destination in the world for research
and development investment.
The level of exports tripled in 6 years,
reaching 3.2bn dollars in 2010.
More than
240 companies are settled in the Mexican aerospace industry,
270% more than those established in the country in 2005.
Mexico is
top 10 provider to the American Aerospace Industry, better
than all BRIC countries.

27. What has been done to promote the IT sector in Mexico?
PROSOFT 2.0: A long run public policy (2002 – 2013)
7 strategies
Start, progress and goals

28. Testimonials
Mexico is ranked as the fourth global player in the exports of IT services and BPO after
India, the Philippines and China.
Gartner Group
Mexico is the only Latin American country that scored "Very Good" in the assessment
of cost, while other countries have had only a grade of "Good."
Gartner Group
Mexico is set at position 6 in the Global Services Location Index 2011 , becoming the
first North American country due to the availability of human capital and the financial
attractiveness (costs).
AT Kearney
Mexico is ranked as the most competitive location allowing a cost savings of 53.4% in
activities of Back Office / Call centers, 31.7% in Software Design and 34.1% in Web and
Multimedia, compared to the location of U.S. operations.
KPMG

29. What is ProMéxico?
Soft Landing
Ombudsman
One stop shop
Investor-Aftercare
Cooperation, advice and information

30. Bilateral Business Summit Series

31. Where to get information
http://wiki.promexico.de/
http://www.promexico.gob.mx/
http://mim.promexico.gob.mx/

32. Thank you for your kind attention!!!
ADEL ABOUHANA