Economy experts say that while the rest of Latin America takes a hard hit, Mexico is managing to come out on top.
While they admit that the country’s economy isn’t surging, they do say it is surviving, something other Latin American countries such as Brazil cannot claim. In a year of tough economic times, Neil Shearing, chief emerging market economist at Capital Economics, says, “Every problem and every headwind that you think of with Brazil, the reverse is happening in Mexico.”
With plunging currencies, low commodity prices and a stock market sell off that hit the region hard, Mexico’s economy continues to grow. Even unemployment is falling as the county’s debt was upgraded earlier in the year, an opposite situation to Brazil, which had been the region’s largest success story until recently as it suffers a recession.
Shearing and other experts project Mexico’s economy will grow about 2.5 percent this year, ranking among the top performers, but some go even further projecting Mexico to be the best performer into next year.
By contrast, Brazil’s economy is expected to shrink 3.3 percent in 2015, according to Bank of America’s forecast. Experts say its recession will likely extend into the upcoming year.
Although Brazil is still Latin American’s largest economy, Mexico falls in second. Mexico’s unemployment rate is currently 4.3 percent and has been moving downward all year.
President Enrique Pena Nieto helped pass a wide-sweeping bill through Mexico’s Congress (when he was president-elect) in 2012 that reformed minimum wage, women’s worker rights and labor union transparency. Pena Nieto has also passed major reforms to open some of the country’s oil fields to foreign investment and break up Mexican business monopolies.
“They changed the constitution, they pushed forward,” Vladimir Werning, head of Latin America research for J.P. Morgan, said of Mexico on Tuesday at the Council of the Americas.
Meanwhile, Brazil’s recession-ridden job market is losing jobs: unemployment is 7.5 percent and experts say it’s possible unemployment could reach double digits by next year.
They also say that Mexico’s economy is closely aligned with the U.S. economy and making them major trade partners, while Brazil has dramatically increased its trade ties with China over the past decade weighing on Brazil’s potential growth as China’s economy slows.
Although Mexico may be the top economic performer in Latin America, that doesn’t mean it’s free of problems. Immigration and drug trafficking and two hot topics for the country, however, Mexico’s economy appears to be pushing Brazil off center stage in Latin America.