Mexican CEO’s have not-so-positive outlook after year of uncertainty

27 November 2018 Consultancy.lat

At the beginning of year, Mexico was touted to undergo a rocky few years. There was a certain ‘limited faith’ in the air, with an increasingly hostile rhetoric from the northern neighbors and NAFTA hanging in the midst, a looming trade war and national elections. However after a tough year, it looks like Mexican business leaders are beginning to shake of the veil of pessimism. A new PwC report identifies otherwise.

In line with tradition for the Asia-Pacific Economic Cooperation event held in Port Moresby this month, global professional services firm PwC has released the APEC CEO Survey 2018. The survey provides insights into the mentality of CEOs from each of the 21 nations who comprise APEC.

Mexican CEOs are considerably more pessimistic than a year ago. They have survived through a disruptive year in the global environment but have outlined their changing attitudes. Whilst the overwhelming majority (82%) of Mexican CEOs have either some confidence or a lot of confidence in their ability to grow their businesses in 2019, the results show that last year, this was considerably higher.

In 2017, this number was 86%. CEOs were roughly more positive than currently, but the level of confidence is the significant indicator. Last year, those numbers were split between 46% who had a lot of confidence in growth and 40% who had some confidence in growth. Today, it’s weighted with a quarter of CEOs (21%) having a lot of confidence and 61% with some confidence. This reflects poorly against the APEC average of 36-52% split.

The PwC report identifies a significant challenge posed by a tricky international environment for Mexican businesses. However Mexican CEOs are not entirely pessimistic about the past year or the future. Although they can see that trade barriers and especially tariffs can hinder their businesses growth, many are looking beyond the initial issues and using creative business strategies to harness growth. 

Level of confidence in terms of income growth prospects

“One of the reasons for optimism among CEOs is that, definitely, the US economy, the main market for Mexico, is registering stronger growth this year than in the past (in fact, the largest growth in its recent history) and continues its course, regardless of political issues,” said PwC Mexico Partner, Iván Jaso.

Of all of the Mexican participants to the survey, 31% saw no significant changes in international activities in the last 12 months. That being said, 26% said they saw an increase in profit opportunities due to the new bilateral trade agreement. A further 17% saw an increase in profit opportunities due to a new multilateral trade agreement.

“We support that any circumstance, such as a trade war or a new agreement, rather than a brake, is an opportunity. Depending on the sector, some Mexican companies will not be affected by the rates in the United States. We can also see all the countries that have problems with the United States and provide them with goods. China is going through trade tensions after Washington imposed a series of tariffs on its exports of steel, aluminium and other products.”

“To take advantage of these opportunities, the country has challenges ahead. The first is the diversification of Mexico to the world, the country has remained with the US as the main market for about 80 years for different reasons. But when situations arise, such as renegotiating a treaty, we realize that we have very few exports to other sides, especially in Asia Pacific and Latin America. That is a great opportunity.

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