Weak trade dynamics will persist in ----, largely due to sluggish export growth. We have revised down our forecast for net exports and now expect that they will subtract -.- percentage points (pp) from headline growth in ----, from our previous -.-pp forecast. Oil exports are set to contract even more sharply than we had previously projected. Our Oil & Gas team has long expected that oil output would fall in ---- as Pemex � the lone operator in Mexico at this point � struggles to bring online new production in the face of rapidly maturing acreage (see Production Will Decline To ---- , November - ----). However, lower-than- expected oil prices and sharp cuts to Pemex s budget are now poised to weigh on production to an even greater extent than we anticipated. ...On the other hand, US demand for other heavy machinery � much of which is tethered to mining and agricultural production � will remain weak in an environment of low commodity prices (see US: Weekly Data Analysis , December -- ----). Given the ties between the Mexican and US supply chains, this will temper the expansion of Mexican manufactured goods exports.
...Access to credit is also improving fol- lowing the passage of banking sector reform in ----, which will gradually increase the share of total consumer spending made through credit. ...The MXN-.-trn (USD---bn) National Infrastructure Plan, which outlines --- projects to be developed between ---- and ----, will be an important vehicle for infrastructure investment. The manufacturing sector, which accounts for over half of total foreign direct investment, will remain a main destination of investment as companies seek to gain exposure to a recovering US consumer. We forecast gross fixed capital formation to account for --.- of GDP by ----, up from --.- in ----. ...We forecast gross fixed capital formation to account for --.- of GDP by ----, up from --.- in ----. Net Exports: Imports of both of consumer and capital goods will expand at a rapid pace in the coming years, as households disposable income increases and manufacturing sector produc- -- Business Monitor International Ltd www.bmiresearch.com
...