Global distribution issues stimulate nearshoring to Mexico15/12/2022
Recent changes in the operation of global supply chains provoked because of the Covid-19 Pandemic and the tax war between China and the United States of America have had a good impact on Mexico’s exportations.
By the end of May, 2022, the National Geography and Statistics Institute (INEGI) of Mexico reported a rise of 22.4% in the exportations, compared with the same month of 2021. INEGI reported may as the 7th consecutive month that registered a rise in the amount of the sells to other countries.
In an explanation about the income distribution, the institute informed that US $46,196 million dollars corresponded to non-oil exports, with an annual increase of 20%.
The numbers showed a development in the country’s industrial activity; the Interamerican Development Bank announced that it anticipated an income of US $29,000 million, because of the commercial exchange with the United States of America in a scenery of nearshoring to Mexico. This institution explained that Mexico could, in the medium term receive an additional income of US$ 2,600 million dollars because of the reconfiguration of the global supply chains.
The commercial exchange between Mexico and the United States of America has one of its strong points in the region of Tijuana, that concentrates a region of industrial parks. There, different pharmaceutical industries, manufacturing industries, and logistic industries have their main activity installations.
Solili, a Real Estate data analysis company, informed that during the first 3 months of 2022, Mexico’s exports showed the tendencies of the activity in the borderline between the United States of America and Mexico. There, the automotive industry and electronic device production are the axes that allowed cover the growing demand for articles in the United States. The production levels in Mexico covered the failures of the global distribution operators.
Good results in six states
Mexico’s exports had a total amount of US $118,325 million dollars considering the first 3 months of the year, INEGI announced while reporting a growth of 19% comparing to the same period in 2021.
The main growth rates were the best in almost 10 years, with good results for Chihuahua, Coahuila, Baja California, Nuevo Leon, Tamaulipas, and Guanajuato.
The six states represented 58.8% of all Mexico’s exports amount. They all registered double-digit growth in their sales amount to other countries.
Main export states in 2022 first three months
- Chihuahua: US$ 16,923 million dollars.
- Coahuila: US $13,918 million dollars.
- Baja California: US $12,161 million dollars.
- Nuevo Leon: US $11,209 million dollars.
- Tamaulipas: US $8,030 million dollars.
- Guanajuato: US $7,263 million dollars.
Indicators wouldn’t support nearshoring growing rates
The economic growth shows that Mexico could benefit from the nearshoring strategy that foreign companies develop, but the Swiss investment bank UBS informed recently that the numbers don’t show an advance in the country.
UBS’ investigations shows that nearly 90% of the executives from enterprises with activities in China would consider a relocation; 23% of them considers Mexico as an option, but UBS explains that the main indicator for analyzing nearshoring effects is the industrial infrastructure development, in which Mexico has not registered an important advance.
UBS also said that the direct foreign investment is lower than before the Covid-19 Pandemic, and the border states and Bajio, the main industrial regions in the country, are not growing in these terms.
According to the firm, the number of exports to the United States of America grew 0.1% since 2018, a number that shows the possibility for Mexico to doesn’t benefit from nearshoring.
UBS also tells there’s no evidence of a slower globalization rate or a decision from enterprises for making supply chains shorter by establishing operations in the nearest countries.
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