mirsad sarajlic I recently wrote an article that did a deep dive into the Mexican Economy, before making the case that OTCPK:BOMXF , which owns the main Mexican Stock Market, is a Buy. I refer readers interested in more detail about Mexico’s fundamentals to it, but in brief; During the years 2014 to 2020, Mexico’s economy shrank 2.95% in real terms, in large part due to the Shale Revolution in the US.
The contribution of the Oil and Gas sector to Mexico’s GDP went from approximately 6% during the early part of the decade, to 1.3% in 2023. However, Mexico has managed this transition, and in the three years 2021 - 2023, the economy grew a total of 12.
9%, or by an average of 4.3% per year. A driver of recent growth has been Foreign Direct Investment, of which over half has been Greenfield Investments, with approximately 40% of investments being made in the manufacturing sector, and a further 10% in transportation.
This trend is expected to continue as US Manufacturers nearshore, by moving factories from China and South East Asia in order to avoid tariffs, and to take advantage of Mexico’s membership in the USMCA trade agreement . Mexico’s fiscal position is solid. Deficits have been in line with those of the US as a percentage of GDP, and its total Government Debt is 50% of GDP, versus 150% in America.
The Mexican economy is in reasonable shape. The Unemployment Rate is 2.6% and inflation is 4.
7%. The peso has been one of the strongest currencies in the world since 201.