To be fair, it isn’t that Mexico is experiencing rocketing growth—the economy should expand by 3.5-4 percent this year. Rather, Brazil’s fortunes have fizzled remarkably fast since 2010.
Unpacking the trends, the oft-cited driver of Mexico’s growth, robust exports to the United States, might be nearing a plateau. Exports of Mexican car and car part to the United States are at record levels; this may prove temporary. Oil prices are likely to come down over the coming months, also cutting into Mexican exports. But having said that, Mexico’s future seems bright for a different reason: a budding middle class. The average Mexican now makes around $14,000 a year.
This will help U.S. producers in turn. A recent article in the Washington Post notes:
The growing middle class that is fast becoming Mexico’s majority is buying more U.S. goods than ever, while turning Mexico into a more democratic, dynamic and prosperous American ally.
Moreover, Mexico’s middle class doesn’t rely on credit the way consumers in Brazil do, so the country isn’t a half-point hike away from screeching to a halt.
Graphic from npr.org