Talking to Mexico’s CEOs: Four Key Takeaways

20 Nov 2017

Jaime Pérez-Seoane de Zunzunegui, OBG Americas and North Africa Regional Editor

Jaime Perez-Seoane de Zunzunegui
Regional Editor for North Africa and The Americas
Follow Jaime on Twitter LinkedIn

Oxford Business Group launches its latest Business Barometer: Mexico CEO Survey at an interesting time, with business leaders anticipating the renegotiation of the North American Free Trade Agreement (NAFTA) and the results of the July 2018 Mexican presidential election.

After Donald Trump won the US presidential election in November 2016, the business community and the media in Mexico repeated one word countless times – uncertainty. While they constantly referred to 2017 in such terms, there were also several calls to action: stakeholders underscored the need to diversify the economy – both by sector and in terms of trade partners – and add more value, leaving behind the traditional perception of the country as a factory at the back door of the US. To achieve this, industry players are demanding further investments and integrated collaboration in education, engineering programmes, and research and development (R&D).

This Business Barometer is particularly interesting, as it allows us to compare the attitudes of this year with those of the previous edition, published in December 2016.

These are the four main takeaways from OBG’s latest CEO Survey in Mexico:

Business leaders are still optimistic. Despite persistently high levels of uncertainty influencing the economy, over 80% of respondents are positive or very positive about local business conditions – up from 73.5% last year. There was, however, a decrease in the proportion of CEOs that said they were likely or very likely to make a significant capital investment in the next 12 months, which fell by three percentage points to 72% this year.

The real year of uncertainty could be 2018. Next year we will know the results of the NAFTA agreement, and Mexico will have a new round of national elections. Therefore, now is the time to invest and secure market shares; despite current challenges, Mexico has a solid foundation.

Mexico still largely depends on the US. Diversification and a reduction in bilateral dependency will always be good ideas, and are certainly priorities; however, the economic performance of the US – and, to a lesser extent, the political volatility of the Trump administration – continues to influence the business environment.

R&D is key to growth. According to 30.4% of CEOs surveyed, R&D skills are in greatest need, closely followed by engineering and leadership, each at 24.3%. The results point to a shift in opinion since last year, when more than half of respondents cited engineering as a priority above R&D and leadership. While all three sets of skills are essential, they are only integrated in Mexican business culture to a limited extent. Public and private entities must pursue the development of these expertise to allow them to align with market demands more closely, and continue adding value to goods and services.

Today’s reality is quite complex: macroeconomic stability and growth are heavily dependent on US policy, with Mexico’s ability to forge new trade partners and, to an increasing extent, its internal consumption levels likely to be key to future economic performance. The private sector’s desire to invest and the public sector’s attempts to modernise through reforms should together bear fruit, even if this occurs more slowly than expected.

Tags:

The Americas Mexico Economy

Jaime Pérez-Seoane de Zunzunegui, OBG Americas and North Africa Regional Editor

Jaime Perez-Seoane de Zunzunegui
Regional Editor for North Africa and The Americas
Follow Jaime on Twitter LinkedIn