A Focus on Brazil and Mexico
For the fifth time this year, economists have reduced their economic forecasts for Brazil for this year and next year. Economists also increased their estimate for the 2015 inflation rate to 8.97 percent from 8.79 percent, according to a weekly central-bank survey.
The government of Brazil announced at the end of June the launching of its National Export Plan (PNE) to increase exports as a means of helping prop up its weakened economy. The plan will focus on five areas: access to markets, commercial marketing, ease of trade, export financing guarantees and the improvement of the fiscal system related to foreign trade.
Brazil’s president recently outlined a $65 billion infrastructure plan to sell to the private sector new concessions to build and operate nearly 7,000km (4,350 miles) of roads, as well as four large airports and a number of ports and railways.
Under the package, Brazil will offer concessions worth about R$66bn for roads to connect soybean growers of the interior to ports, R$86bn for railways, R$37bn for ports and nearly R$9bn for airports, including for the cities of Salvador, Florianópolis, Fortaleza and Porto Alegre.
President Rousseff stated that her administration will directly engage in activities that will expand and diversity market access for Brazilian products and will be making more official trips abroad to support the plan.
Mexico’s Global Economic Activity Index rose 2.4 percent in April compared to April 2014, an increase fueled by growth in the agricultural sector.
The Mexican government will hold its first of several petroleum auctions this week. This will effectively end the monopoly of state-owned Petroleos Mexicanos (PEMEX) which began in 1938 when the country’s oil fields were nationalized.
The auction will cover 14 shallow-water blocks in the southeastern Gulf of Mexico. Seven groups and 17 companies — including two of the world’s largest, Exxon Mobil Corp. and Chevron Corp. — have prequalified to bid. Mexico will auction onshore fields later this year, followed by auctions of deep-water and shale fields.
Mexico is expanding beyond the low-wage, low-value manufacturer that it was when NAFTA was first implemented over 20 years ago. With an increasingly skilled Mexican workforce and a growing middle class, foreign direct investment into high-value manufacturing facilities has been increasing with more in the works.
This is a near-shoring trend that was recently fueled by the west coast port congestion which triggered many to review their supply chains and look for alternatives that would provide them with more consistent and reliable production centers. Mexico has multiple routes of entry in the US and offers reduction in cost of transportation and improved speed to market.
Mexico is also the second-largest source of high-value, high-tech products such as cell phones, gaming consoles and computers, after China.
The Mexican government is moving to enhance its competitive position by investing heavily in road, rail and aviation infrastructure improvements and by streamlining its customs procedures.
- The U.S. Department of Transportation recently began permitting Mexican motor carriers to apply to conduct long-haul, cross-border trucking services. Under this program, Mexican trucks must be inspected and are required to meet the same safety requirements as U.S. trucks.
- Mexico is continuing to work with Canada and the U.S. to improve customs harmonization and signed on to the Wassenauer Agreement on export controls last year which, along with implementing an export control system along with its single platform on imports they now have greater trade compliance
- Cargo security is improving and IP protection is as strong as or stronger than in many other countries around the world.
Opportunities for Florida Firms:
Over the next four years, the Government of Mexico plans to invest more than $600 billion to modernize its energy, transport, telecommunications, and water and environment sectors. In order to support the country’s ambitious reform efforts and position U.S. firms for success implementing critical infrastructure projects, USTDA developed the Mexico Infrastructure Project Resource Guide to provide U.S. industry with details on Mexico’s infrastructure sectors and specific infrastructure development plans through 2018. The resource guide includes over 25 project profiles, complete with real-time market intelligence, detailed project plans, contact details for key decision makers, procurement timelines, and planned financing mechanisms.
Project profiles in the guide are separated by sector, and include energy, transport, telecommunications, and water and environment. The full guide can be viewed and downloaded on USTDA’s website.