Investor Report Mexico: Auto focus

Sep 1, 2012

Mexico’s manufacturing sector is poised for a significant boost – provided the US economy doesn’t falter

By Ivan Castano

Mexico’s manufacturing output should grow 3.5%-4% in 2012, despite concerns that slowing US demand could hit production in the second half, according to leading economists.

The fast-growing automotive, electronics and aerospace industries are expected to fuel the hike, they say, adding that foreign direct investment is seen matching or exceeding last year’s levels.

Even though the US ISM manufacturing index fell sharply to 49.7 points in June, the decline is unlikely to trigger a sharp drop in the IMEF Mexican manufacturing.

"We have seen strong demand from the US this year and this should continue through the remainder of the year," says Juan Lorenzo Maldonado, an economist at Roubini Global Economics. "We don’t expect a sharp drop in Mexican manufacturing in the second quarter."

But the risks of a slump could increase in 2013 amid signs that US and European economies...

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