Let's Go2Vallarta - Articles

Mexico from a World Perspective
By Harriet Cochran Murrray for Cochran Real Estate - March 2008

TOURISIM

The Mexican Chamber of Commerce for Tourism and Services has released figures for 2007. According to their count, tourism grew by 7.30% last year, outpacing the country’s total economic growth of 6.30%. Increase in tourism generates a significant number of jobs for Mexican nationals.

Predictions for 2008:

Growth of 2.90%  in Mexico in General Commerce.
Growth of 6.80% in the Service Industry.
Tourism growth predicted at 8.2%. 

In a separate report from “International Living”, México now is the preferred destination for a second/retirement home over Panama, which has fallen to 4th in popularity.

International predictions for Mexico’s economy are mixed.

1. INTERNATIONAL CONSORTIUM - There is enthusiasm over Mexico being included in the emerging group of BRIMC nations. This consortium includes Brazil, Russia, India, South Africa and Mexico.*

*Wikipedia
The four BRIC countries: Brazil, Russia, India and China.  BRIC or BRICs are terms used in economics to refer to the combination of Brazil, Russia, India, and China.

General thinking is that the term was first prominently used in a thesis of the Goldman Sachs investment bank. The main point of this 2003 paper was to argue that the economies of the BRICs are rapidly developing and by the year 2050 will eclipse most of the current richest countries of the world.

Finally, because of the popularity of the Goldman Sachs thesis "BRIC" and "BRIMC" (M for Mexico), these terms are also extended to "BRICK" (K for Korea), "BRICS" (S for South Africa), "BRICA" (GCC Arab countries – Saudi Arabia, Qatar, Kuwait, Bahrain, UAE) and "BRICET" (including Eastern Europe and Turkey) have become more generic marketing terms to refer to these emerging markets.

 2. CREDIT AVAILABLE - Economists’ risk factor for Mexico has remained low in recent years, allowing more people to gain access to credit.  The banking sector has provided car loans to nationals as one of its first consumer products.  Vallarta’s current problem with traffic comes in part from the proliferation of new vehicles recently purchased as bank consumer loans.

3.  INCREASED COST OF STAPLES - Commodity prices of food fluctuate since Mexico is a basic food importer (not processed and packaged) and oil production is falling as the Cantarell oil field is being used up.

4.  NO SUB PRIME - The good news is that are no sub prime loans in Mexico because lending standards were never relaxed to the point of giving no income, no job, not assets loans (NINJA).

5.  OVERALL FINANCIAL STABILITY - Specifically, México’s housing boom has occurred as a result of conditions which have arisen because of Mexico’s financial stability, not because of a speculation bubble.

6. GROWTH INTOURISM/SECOND HOME MARKETS - There is continued grow in the Cancun Riviera Maya, Puerto Vallarta/Nayarit, Los Cabos, San Miguel de Allende/Bajio, and Guadalajara/Chapala.  The real estate market is soft in Puerto Penasco (Rocky Point) and Ensenada/Rosarito.

NEIGHBOR MICHOACAN

Michoacán is in the southwest part of Mexico, bordered by Colima and Jalisco to the East.  It has been known historically as an agricultural state, as its major product is avocados. This market has expanded greatly in recent years with increased exports to the US.

A major source of growth is the Pacific Port of Lázaro Cárdenas. This deep channel port has excellent road and railway connections. It is closer to the US Eastern Seaboard than Long Beach or Los Angeles, California. This port, which will allow entry for goods for our area of Mexico, will have the most advanced operation technology in the world and the most modern customs installation in Latin America.

The developing market of foreign car imports is served by shipment through the Pacific Port onto trucks destined for the Mexican market. Toyota, Honda, Mazda and Isuzu automobiles are shipped via Lázaro Cárdenas. 

Administrators of Pacific Port are EW Hutchinson Port Holdings, owned by Li Ka Shing, Hong Kong billionaire.  Hutchinson PH operates ports around the world including the afore named Pacific Port as well as the port of Manzanillo.

Further transportation coverage is provided to Michoacán through an economic development alliance with the US state of Kansas, and particularly the Kansas City Southern Railroad which serves many parts of the US.

Early this year, Carlos Slim, often named the richest man in the world, met with the Governor of Michoacán and engineers to discuss the modernizing of the coastal highway from Lázaro Cárdenas to Manzanillo, in the state of Colima.

A Chinese/Mexican joint venture is underway in Michoacán for construction of a new automobile factory. Low cost vehicles will be produced for sale through the Elektra chain of department stores. 5,000 new jobs will be created with an anual output of vehicles of 200,000 units a year.

At this point, Michoacán is the only Mexican state without massive tourism development. It has miles of coastline divided hilly terrain and pristine beaches. It is ready for tourism industry investment.

Harriet Cochran Murray
E-mail: harriet@pvnet.com.mx

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