beyondbrics

Put aside the bloody news headlines about Mexico’s drugs war for a moment. Look instead at how investors view the country. They are, in a word, bullish.

Why? As an FT survey published today argues, the Mexican macroeconomy is well-nigh bulletproof.

That provides a sound platform for business activity, which is just as well, although it shouldn’t be that surprising. It’s not even that unusual – at least among “sensible” countries. Just look at Colombia’s experience. Between 1980 and 2010, when Colombian drugs and guerrilla-related violence peaked and then fell, the economy grew an average of 3.5 per cent a year. Remarkably, there was also only one year of recession. The lesson here is that countries cannot even begin to deal with a drugs war if they don’t have a stable macroeconomy in place. Colombia did it. Mexico has it.

Will Mexico, though, build on this stability to enact the many reforms the country still needs to do? Not until the 2012 Presidential election has taken place. But beyond that, John Authers, head of the FT’s Lex column, gives a tentative yes. So does Luis Rubio, a guest columnist. In one encouraging sign, regulators are already starting to curtail the oligopolies that stifle competition in the domestic economy.

Dealing with some of the most violent criminals on the planet; pushing through economic reforms that defy large vested interests; re-building the country’s institutionality. None of this is child’s play. Still, in the meantime, several sectors of the Mexican economy are booming. As an article in today’s newspaper also shows, one Mexican company has even turned child’s play into big business. Latin America is more than just about commodities.

Related reading:
Mexico: good news on growth prospect, beyondbrics
“Made in Mexico” gains ground on China, beyondbrics
Mexico: The happy state, beyondbrics
Mexico’s economy: in a sweet spot, beyondbrics
Mexico file, beyondbrics