Mexico Manufacturing Overshadows Brazil & Argentina

By Doug Donahue

Mexico Manufacturing continues to expand while Brazil and Argentina’s continues to decline, according to a special report by the Manufacturers Alliance for Productivity and Innovation, or MAPI. MAPI’s analysis, lead by Fernando Sedano, PhD, concludes that while Latin America’s 3 largest economies contribute 80% of the regions manufacturing output, it is only Mexico that is sustaining and expanding its production due to strong export demand and “resilient” consumer expectations domestically. In contrast, Brazil’s manufacturing industries have actually contracted in the last six months, experiencing a recession, although government-induced incentives will likely re-invigorate some recovery in the near term. And Argentina’s protectionist measures have contributed to a substantial slow-down in manufacturing due, in part, to “inflation-adjusted exchange rate appreciations that are hurting the competitiveness”.

For Mexico’s part, several sectors stand out as contributing to increases in Mexico manufacturing overall: the automotive, equipment and machinery sectors, with a trickle down affect to supplier layers. MAPI predicts the next several quarters will demonstrate additional growth with further expansion for 2012. The report additionally stated that it expects 15 of the 16 industries it surveys to grow, with the ‘big 3’ (food and beverages, automotive, and machinery and equipment) contributing mightily to the forecast at 45% of Mexico’s manufacturing capacity. Through 2012, food and beverage’s growth is expected to increase by 4.3%, the automotive growth to increase initially by 2.9% but accelerating to 6.4% by year’s end, and machinery and equipment to expand by 8.8%.

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