Mexico Continues to Keep Industry Guessing
Mexico’s place as one of the key emerging economies to watch after the BRICs (Brazil, Russia, India, China) slipped considerably in early 2013. However, there are still some very pro-Mexico market watchers and trade credit grantors undeterred by potential headwinds. In any case, Mexico continues to be one of the most heavily debated countries in the world regarding its economic prospects.
July statistics unveiled by the Mexican government in late September showed an encouraging 0.47% increase in economic activity from the previous month. Though the consensus from analysts is that annual economic growth in 2013 will pale in comparison to the 3.8% posted in 2012, the July statistics offer “tidbits of better times ahead,” according to a Wells Fargo Economics Group commentary. The report highlighted notable improvement in the service sector, the economy turning a bit of a corner after a weak first half and the important positive implications of fiscal reform in the long term.
However, Wells Fargo Senior Economist Eugenio Aleman warned that Mexico isn’t “out of the woods” yet and that fears over reforms, real or perceived, about their enactment under new President Enrique Pena Nieto, could have a chilling effect on growth in the short or even medium term.
On the trade credit front, Mexico was a hot topic at September’s FCIB Global Conference in Philadelphia. A number of attendees expressed concern about offering open terms to Mexican-based buyers, with some saying they flat-out won’t do it. Perceptions of problems continue to weigh heavily on creditors, including fear of slow payment, the government’s inability to reign in the violent drug war in several regions and that the various states can have varying and inconsistent laws that impede collection efforts. However, an even greater number of FCIB Global attendees spoke in defense of Mexican customers and business partners. Their sentiment was that there were few if any problems with timely payments and that they were not overly concerned with recent economic challenges that have faced the nation as a whole. Those credit managers also spoke of the high value they put on developing a strong relationship with their Mexican business debtors as much as any in the world.
- Brian Shappell, CBA, CICP, NACM staff writer