Bankers tip Mexico to overtake Brazil

Enrique Pena Nieto’s victory in the Mexican presidential race is further encouraging bankers’ anda investors’ bullish stance on the future of the country’s economy. While the stock market had largely priced in the victorious candidate’s reformist agenda before the election – there was no immediate surge in the index following the announcement of the election results – the IPC is still up nearly 10% in 2012 and is one of the world’s best performing equity markets.

Nomura added to the sense of optimism about Mexico when it published a report in July that made the bold assertion that the bank believes Mexico will surpass Brazil to become the region’s largest economy within the next ten years. The report predicts annual growth of between 3.5% and 4.5%, based on the resurgence of the country’s manufacturing base as it regains its competitive cost base against China.

The bulls argue that Mexico’s competitive manufacturing costs relative to China, its open economy with strong linkages with the US, and its low private and public sector debt have aligned Mexico to reap the benefits of a recovery in the US economy.

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