Saturday, March 30, 2013

Steady rise of India's trade with Mexico

Yes.. Steady is the word to describe the growth of India's trade with Mexico, the second largest market of Latin America. The bilateral trade reached 6.29 billion dollars in 2012 from 4.15 billion in 2011,  2.9 bn in 2008 and 1.03 bn in 2003.

India's exports were 2.95 billion dollars in 2012 increasing by 24% from 2.38 bn in 2011. Engineering products topped the list of export items of India as usual. Exports of vehicles and parts were 466 million dollars followed by diesel- 439 m, organic chemicals-306 m , electrical and sound equipments-290 m, equipments and machinery-211 m and garments -150 m.

Crude oil imports in 2012 were 2.83 billion dollars (accounting for 88% of India's imports from Mexico) followed by electrical machinery and equipments - 242 m. India was the eighth largest export destination of Mexico in 2012. Reliance was the importer of Mexican crude oil, as in the past several years.

Although Brazil is the largest market of Latin America, Mexico is the trade leader in the region. Mexico's trade in 2012 was 741 billion dollars while Brasil's trade was 408 billion. Eighty percent of Mexico's exports go to USA and Canada, with which Mexico is bound in NAFTA.  Surprisingly USA accounted for only 49% of Mexico's imports. Mexico had a trade surplus of 89 billion dollars with USA in 2012.

Mexico had a massive trade imbalance with China in 2012 as usual. Mexican exports to China in 2012 were just 5.7 billion dollars while their imports were 57 billion.

Mexico's macroeconomic fundamentals are strong with healthy indicators such as 3.57% of inflation, interest rate of 4.5%, current account surplus and ample forex reserves. GDP growth in 2012 was 3.8% and it is expected to go up in 2013.The manufacturing sector is growing with a new vibrancy after having overcome the Chinese competition. Many American and  foreign companies have started production of manufactured goods in Mexico for the markets of USA and Canada. Mexico has become the fourth largest exporter of cars in the world after Germany, Japan and South Korea.

The assumption of Enrique Pena Nieto, the young, dynamic and visionary leader as the new President of Mexico augurs well for accelerated economic growth and prosperity. He has already implemented some reforms, which were considered as politically impossible even last year. He has shown courage and diplomacy to work with the opposition parties to bring about the reforms needed by the country.

Given the positive prospects of Mexico in the coming years, India's trade with Mexico could reach 10 billion dollars by 2015. 

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