Mexico’s Economic Reality and Future

One of our main objectives at Freedom Sourcing is to keep a detailed look at Mexico’s economic outlook in the short, medium and long term. This helps us adjust our approach to how we purchase and sell lumber. This also gives us an opportunity to advice our customers and making purchasing recommendations to our customers.

Mexico continues to make a transition into a more important sovereign economy. Though it continues to be dependent on the US market and will remain so for the longer future, it has been more resistant to the macroeconomics of the United States. For decades, when the United States caught a cold, Mexico would get pneumonia.

In the early 1990’s as NAFTA was being negotiated by then President Clinton, Mexico’s GDP was roughly 261.3 billion US dollars. Today, the GDP has surpassed the trillion dollars with 2022 ending at 1.41 trillion US dollars making it the 15th largest economy in the world. The Mexican Peso is the 2nd most traded currency in the first 6 months of 2023. It is at pre-2015 levels, roughly at 17. 12 pesos to the dollar.

What does the future predict?

It is expected by economists that the economy will grow by 2.6 percent by the end of the year 2023.  The Peso will devalue to 19.5 pesos to the dollar. This is mainly due to persistent inflation. The job market remains strong coupled with inflation will cause a wage value increase.

Mexico’s future lies with the concept of Nearshoring with an exodus of foreign companies out of China which makes Mexico a perfect market to set up offshore manufacturing plants because it borders with the largest market in the world. Foreign Direct Investment (FDI) in 2023 is expected to surpass 35.1 billion dollars with 50% of that going to the Monterrey market within Mexico.

In 2024, the expected public debt will remain stable (% of GDP) and the prospect of Nearshoring will be something economist pay close attention to. The prediction is that because of a weaker global market it will be somewhat tapered.

What will this mean to lumber, As the growth in the US decrease to a predicted 1.6 percent, pricing will most likely stay stable at attractive prices for Mexican companies and will continue to look North for a healthy share of its lumber needs. Freedom Sourcing will be there to take advantage of good pricing for its customers and continue to fill the pipeline for its customers and new customers. The company will continue to establish closer relationships to its current suppliers and new suppliers.

Let us be your source for your lumber needs, Freedom Sourcing is at your service.