Mexico: Service sector driving economic growth - Wells Fargo

Analysts from Wells Fargo, explain that the service side of the Mexican economy has become a larger share of value added and they point out that growth has disappointed during the past
several years.

Key Quotes: 

“The Mexican economy has continued to move towards becoming a developed economy. Even as it still remains far from a developed economy it has shown characteristics more in tune with a developed, rather than with a developing economy. That is, the service side of the economy has grown considerably as a percentage of the whole. At the end of 2016, the Mexican economy is represented by 63.4 percent services, 33.4 percent industrial and 3.2 percent agriculture, fisheries, and cattle. This compares with 56.5 percent, 39.5 percent and 4.0 percent, respectively in 1993.”

“Within the service side of the economy, commerce and financial activities have seen the largest improvement. That is, the rate of growth in these two sectors over the period has outpaced the rate of growth of the economy as a whole. Meanwhile, in the industrial sector, the manufacturing sector has been able to achieve rates of growth in line with the economy and has kept its participation in the economy relatively stable. However, the mining and commerce sectors have lost terrain and their participation in the economy has shrunk.”

“From the demand side of the economy it is clear that globalization has made strides for the Mexican economy, having transformed into a more open economy measured by exports plus imports as a percentage of GDP. Meanwhile, PCE has also grown at a faster pace than the overall economy. However, gross fixed investment has grown at rates close to the rates of growth of the economy and thus has kept its participation in the Mexican economy fixed between 1993 and 2016.”