Mexico continues to be a country full of opportunities to invest. Although the macroeconomic scenario is highly uncertain, both because of external factors and internal issues, macroeconomic stability—with an autonomous central bank, public finances and external accounts under control, and a well-capitalized banking system—makes Mexico an attractive country for investment within the universe of emerging economies. Nevertheless, our analysis points to a slowdown in the pace of growth from 2% in 2018 to 1.5% in 2019. Among other reasons, this will be the result of the temporary impact of some changes that took place in the early months of the year. But we expect a recovery toward the growth rates of 2.5% seen in recent years.
Private consumption has been one of the main drivers of the Mexican economy, thanks to rising employment and a healthy expansion of bank lending. We believe that private spending will remain a fundamental pillar of economic growth, particularly because of the new administration’s programs to support young people and elderly adults.
The need to provide this country with a modern, efficient infrastructure gives this sector significant potential, which in turn represents a tremendous opportunity for development. Unfortunately, because of pressures on public finances, the government has had to cut back spending on infrastructure projects in recent years. Nevertheless, the new administration has also proposed an ambitious infrastructure program for the years ahead, which will contribute to the expansion and modernization of this sector in the country.
Mexico continues to face a pressing need for new housing, despite a recovery in this industry in recent years.
The Mexican financial system is one of the most solid and well capitalized in the world. And although banking penetration remains relatively low—which could be explained by the high proportion of informality in the economy and the difficulty banks have had in recovering collateral—rapid technological advance and financial reform may spur on a process of increased use of banking services among the population. At Banorte, we are faced with a great opportunity to support growth projects in this country and help many Mexicans achieve their dreams, above all because we are a bank operated by Mexicans, for Mexicans.
Although in the short term the downtrend in oil prices has dimmed the appeal of investment in this industry, the process of opening to private investment is still under way. For now, exploration and production projects have been assigned in which Pemex partners with a private company (called farmouts); other projects have also been carried out with investment exclusively from private companies. The process of opening the country’s electrical sector is also ongoing, and we believe that, in the medium term, the evolution of the energy sector will be a key factor in improving competitiveness and increasing investment, besides helping to ease pressure on public finances.
