Josh Rubin suggests that it’s not just Mexico’s manufacturing and exports that provide investment opportunities but also consumer strength and political stability.
Emerging Markets Spotlight: Mexico on the Move, Pt.2
Elle Wu: So there’s a lot of exciting stuff happening on the export front and that really helps place Mexico on an international setting. What about what’s happening in Mexico, domestically, with, for instance, consumption?
Josh Rubin: It’s really important, because actually the majority of Mexico’s GDP is driven by domestic factors not just the export picture. So, we’re seeing a couple pieces that both are tailwinds from Mexico today. Number 1 is higher oil prices, uh, are good for the government budget. They’re good for government programs, government investment in infrastructure. And then secondly, the consumer has, uh, come out of COVID in a pretty healthy way, and the formalization of the manufacturing sector, along with the strong jobs picture in the United States, are both good for incomes and then spending the Mexican consumer. So, locally, the situation in Mexico looks pretty good.
Elle Wu: Yeah, it’s really good to hear that the local consumers are happy because Mexico also happens to be going into a presidential election next year, and it’s been a very interesting one, because the candidates from both major poll parties are women. But what’s happening underneath the surface there?
Josh Rubin: I actually think the most important thing happening on the surface is stability or continuity. So, uh, about 5 years ago, the current president came in, he goes by the nickname AMLO, and there was concern about what type of policies he would enact. He’s, he’s more openly, um, or he calls himself a socialist, but he’s been very pragmatic, both in fiscal, on the fiscal side and on the social side for policies. Both of the candidates who are leading in the polls today, look like, um, the candidates who will also be pragmatic. So we would expect that, you know, consumers should still be very happy, from a p, uh, international political standpoint, trade partners should be comfortable with the situation. So, we think, you know, sort of on the, the fiscal budget, the consumption strength and on international trade, all of ’em are very well aligned, even as we move into the next election.
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