Mexico has emerged as a key topic in a recent series of investor webinars hosted by IFR in collaboration with Scotiabank. This session brought together a panel of capital market experts to discuss the landscape of Mexico’s sovereign and corporate sectors, highlighting both the challenges and opportunities that lie ahead amid a fluctuating global economic environment.
The discussion provided insight into the performance of the debt capital market over the past year, with a notable focus on the increasing significance of green and sustainable finance in Mexico. The panel featured prominent figures, including María del Carmen Bonilla, head of public credit and international affairs at the Mexican ministry of finance; Jose Jorge Rivero, senior vice president of corporate banking & capital markets at Scotiabank; and Juan Fullaondo, head of Latin American DCM at Scotiabank.
The experts emphasised the Mexican government’s commitment to diversifying its debt portfolio and enhancing liquidity in local markets. They discussed the strategic initiatives aimed at promoting ESG investments, which have gained traction, with a substantial percentage of recent issuances being labelled as sustainable. This trend reflects a broader shift towards responsible investing, positioning Mexico as a leader in the region.
The conversation also touched on structural changes in the market, including new regulations designed to facilitate access for smaller companies and improve overall market efficiency. As the panellists highlighted, the nearshoring trend presents a unique opportunity for Mexico, potentially driving economic growth and increasing demand for financing.
Overall, the webinar underscored Mexico’s potential as an attractive investment destination, particularly as it embraces sustainable finance initiatives and works to strengthen its capital markets. Investors are keenly watching for emerging opportunities that align with financial returns and environmental goals, making Mexico a focal point for future investment discussions.
Mexico, the second-largest economy in Latin America, holds a significant position on the global stage due to its strategic location, robust trade relationships and diversified manufacturing base. The country is a key player in nearshoring, which has seen many companies relocate their supply chains closer to North America to mitigate risks and reduce costs. This shift has bolstered Mexico’s role in global value chains, particularly in sectors such as automotive, electronics and aerospace. Geopolitically, Mexico maintains strong ties with the US and Canada, reinforced by the United States-Mexico-Canada Agreement, which supports trade and investment flows across the region.
In 2023, Mexico’s economy grew by 3.2%, marking the second consecutive year of growth exceeding 3%. However, 2024 is projected to see a slower growth rate of 1.5%, with private consumption and investment decelerating and employment growth slowing. According to the IMF, this moderation largely reflects recently a restrictive monetary policy and binding capacity constraints restraining economic activity.
The country’s economic policy has focused on maintaining macroeconomic stability, promoting financial inclusion, and investing in public infrastructure. Banco de Mexico has maintained a cautious stance to control inflation and support economic stability. As of November 2024, the central bank’s key interest rate stands at 10.25%, reflecting efforts to curb inflationary pressures.
The economy faces several challenges, including stubborn inflation, rising labour costs, high crime rates and the potential economic impact of new administration in the US. Addressing these challenges will be crucial to sustaining economic growth and ensuring that the benefits of nearshoring and other economic opportunities are fully realised.
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