Mexico’s economy will rebound in 2014 and grow 3.9 percent, compared to the 1.2 percent growth registered in 2013, insurer Credito y Caucion said in a report released Monday.
“Mexico will be the exception in a changing pattern of growth in which the advanced markets will grow more while the emerging (markets) will continue leveling off” in 2014, Credito y Caucion said.
The company is a unit of Grupo Atradius, which operates in 45 countries.
Mexico’s economy will rebound because of “its unique relationship with the United States,” the destination for nearly 80 percent of Mexican exports, Credito y Caucion said.
The U.S. economy is expected to grow between 2.5 percent and 2.6 percent in 2014, the credit insurer said.
Mexico’s economy “experienced drastic deterioration during the credit crisis, began recovering in 2010 and has performed very modestly in 2013,” the report says.
“Despite the solid short-term economic policy, the Mexican economy still faces structural weaknesses,” Credito y Caucion said.
These weaknesses include tax collection, lack of labor market flexibility and an energy industry “monopolized by the state,” the insurer said.
The situation in the energy industry is “the principal challenge” for Mexico’s finances because petroleum accounts for 30 percent of public sector revenues, Credito y Caucion said.
Mexico is the world’s sixth-largest oil producer, but the country’s proven oil reserves have fallen from 34 billion barrels in 1998 to 14 billion barrels today, giving the nation enough oil for only 10 more years.
Mexico’s offshore reserves are twice the size of its onshore reserves, but state-owned oil giant Petroleos Mexicanos, or Pemex, “does not have the knowledge and resources necessary to invest in exploration and production, due mainly to the fact that 90 percent of its income goes to the state,” the report said.