Essay on Mexico Pest Analysis

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Mexico PEST Analysis

Executive Summary
Mexico has resulted in recent years as one of the most promising emerging economics nevertheless the downturn occurred in 2009 under the influence of the crisis in the United States. In 2010 the economy has restarted its growth trend, which according to the forecast will bring the Country among the elites of world economy. This short paper explains the fundamental factors determining Mexico economic growth using the PEST Analysis Framework. In particular it focus on how International Business activities has contributed to economic development of the Country, offering also an once-over on the main industry involved in this process.

Mexico PEST Analysis
Introduction
Approaching the research
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economy, following its cycles and trends since NAFTA agreement signed in 1994 by United States, Mexico and Canada as established a strong economical and political cooperation between these countries.
Exhibit 3 shows that Mexican GDP at PPP has had a constant growth since 2001, except for 2009 when it fell down suffering the effect of the crisis that affected the U.S. since 2008. From 2001 to 2009 the CAGR for GDP at PPP resulted around 5.5%, and after a 6.5% loss in 2009 the economy has returned to grow at around 5% annually and the GDP is expected to increase in the future at an higher rate, allowing Mexico to overcome Italy in the G20 ranking (Euromonitor International, January 2011).
The strong influence of U.S. economy on Mexican one is confirmed analyzing Exhibit 3 with respect to foreign direct investment and exports. United States accounts for more than 45% of total FDI inflows in Mexico and, even if the Country is actually the largest host of FDI in Latin America, it’s undeniable that accordingly with economic downturns in the U.S. the figure of FDI in Mexico declines significantly (Bureau of Western Hemisphere Affairs, December 2010) like happened from 2007 to 2009 (Exhibit 4). The same mechanism act also with exports because U.S. attracts almost 80% of Mexican exports thus during periods of crisis in the U.S. Mexico suffers slowdown in foreign trade (Exhibit 5).
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