Mexico is a nation located between Central America and the United States. The country suffered social and economic impacts during the Covid-19 pandemic. The crisis affected young people, women and informal workers, who already faced many challenges. Regional inequality rates are still high.
Informality and low digital growth have hampered productivity and prospects, but currently the country is recovering, and the macroeconomic policy framework needs to be strengthened for Mexicans to achieve stability. In this post, we will explain how the economy in Mexico works, their economic prospects and local politics.
Would you like to understand Mexico’s main challenges and how to build a successful company in the country? Keep reading!
What are Mexico’s biggest economic indicators?
Mexico has a very diversified economy. It produces oil, has high-tech industries, mining and manufacturing. According to the World Bank, the agribusiness that grows lemons, avocados, oranges, corn, sugar and coffee employed more than 12% of the population in 2020.
See below for details on the most important indicators!
This nation is the second-largest economy in Latin America and is among the 15 largest economies in the world. The country’s biggest trading partner is the United States, which buys 80% of its exports.
According to IMF data, Mexico’s GDP exceeded 6% in the last year due to the improvement in the labor market.
The informal sector represents around 60% of jobs in Mexico, differences in citizens’ incomes are large, education and infrastructure are weakened and crime is on the rise. However, the positive result of the labor market brought a decrease in the unemployment rate in 2021 and social inequalities should continue to decrease in the course of 2022.
The country concerns about climate change and has already started investing in sustainability. Some measures stood out — for example, the usage of single-use plastics was banned in Mexico City last year. The goal is reducing water and soil contamination, as well as the amount of non-recyclables.
Why invest in Mexico?
The consumption of Mexican families has increased in recent months, and expectations are that the country will continue to grow. Due to vaccination, the job market has improved significantly. Therefore, it is important to invest in Mexico, as the growth forecast for this year is 4%, while in 2023 it is around 3%.
Although there has been a considerable inflation increase in 2021, it is expected to drop and infrastructure projects will benefit. With the recovery of the United States, exports will continue to benefit, as the country’s economy will grow by around 2.5% next year. It is worth noting that there has already been a growth of 5.9% after the beginning of the pandemic.
What are the challenges of the Mexican market?
One of the main challenges faced by companies in Mexico is the economic dependence on the US. Other relevant problems are related to underinvestment in the oil sector, an increase in the number of crimes, lack of income for a portion of the population, new outbreaks of Covid-19 and mobility restrictions. The price of raw materials is high due to increased demands.
Companies face challenges to continue operating, production is limited and there is a shortage of goods. In addition, freight costs are exorbitant and high interest rates imply more expensive credit. However, the future scenario in Mexico is favorable for entrepreneurs who intend to invest and do business in this country.
How to make your company successful in Mexico?
To be successful with business in Mexico, you need to prepare in advance for the LATAM market. This country has great business opportunities as it offers several advantages for companies. Manufacturing costs in Mexico are low and its production capacity is among the best, with a variety of goods.
Shopkeepers willing to use a pay-in solution do not need to open branches in Mexico, and they can market their products in a country that has low levels of productivity. Therefore, a great opportunity to gain customers in Mexico is to work with e-commerce, create a specific website and invest in digital marketing to reach the target audience.
Why invest in payment processing solutions?
Investing in digital payment processing solutions is crucial for anyone looking to manage a business that sells in Mexico. This is an important differential to be able to receive the values of the products that will be sold to consumers who live in that country. The ideal solution reduces the chances of fraud and allows increased sales.
With payment processing solutions, the merchant obtains a robust risk analysis of the payment process and avoids scams resulting from cyber attacks. The solution allows entrepreneurs to work with e-commerce, which is in full expansion and increases the revenue of small, medium and large companies.
Digital processes have evolved along with technologies that enable the online shopping experience to be safe, quick and easy. The tools are reliable and distinguish fraudulent from legitimate transactions to avoid inconvenience with intelligent algorithms created specifically to meet the needs of new business models.
How does BoaCompra operate in Mexico and Latin America?
BoaCompra connects local collections to international companies with an API solution that makes the life easier for shopkeepers. With it, stores have access to 140 payment methods in Latin America and in 17 countries. The money collected is sent everywhere without incurring any surcharges.
This partner is a provider of payment solutions for various types of businesses and smart features that protect digital assets. In view of this, it becomes easier to increase the security of operations and approve international sales. BoaCompra’s Smart Fraud Prevention works through machine learning.
Now you know what the outlook for the economy in Mexico is for 2022! BoaCompra is part of the SaaS market in Latin America. The customer uses the site to buy, the merchant sends the information to the solution that passes the data to PagBank PagSeguro and to the issuer. The anti-fraud system checks that everything is ok.
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