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The global fashion business journal

Nov 11, 201911:03pm

Mexico: new political chapter in ‘Latin America’s biggest fashion mall’

The country is immersed in the renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and the United States, in the midst of the global trade war unleashed by Donald Trump’s government.

Jul 2, 2018 — 10:00am
J.Cevallos / L. Molina
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Mexico: new political chapter in ‘Latin America’s biggest fashion mall’

 

 

Political overturn in the epicenter of Latin American retail. The leftist Manuel López Obrador has imposed himself in the elections held in Mexico last Sunday and will govern the country for the next five years, as indicated by all surveys and main preliminary data of the vout counting made yesterday night. The new president inherits a nation that must endure the trail of murders left by the low-profile war against drug cartels while renegotiating its free trade agreement with the United States and Canada. According to a report by news agency Efe, Mexico has registered 200,000 murders and 35,000 disappearances in the last twelve years.

 

Trade and violence are two key issues for a country that is the world’s leading producer of silver, the tenth largest oil producer and one of the largest copper producers, not counting its great tourist potential.

 

López Obrador must now face the renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and the United States. The process was suspended weeks ago, due to the imminence of the electoral process and the divergences caused by the unilateral approval of tariffs on steel and aluminum by Donald Trump.

 

 

 

 

Surrounded by uncertainty, the Mexican textile industry watches everything that happens with the renegotiation, because the United States has become, with a wide difference compared to other countries, its main trade partner.

 

Only in the first four months of 2018, the Mexican textile industry exported goods worldwide valued 1.94 billion dollars, of which 1.75 billion dollars were sales made to the United States.

 

Most of the sector exports to the US market were clothing, amounting 1.49 billion dollars, while 254.9 million corresponded to other textile products.

 

 

 

 

However, the Mexican textile industry not only exports, but also sources goods from the United States. Imports totaled 2.9 billion dollars in the first four months of 2018, of which 1.12 billion corresponded to products from the US market.

 

In fact, of total imports from the United States, 952.2 million belong to raw materials purchases for industrial purposes, while the transactions linked to garments reached 170.1 million.

 

In general terms, Mexico, together with Brazil, is one of the growth engines of Latin America’s economy and, according to estimates by the World Bank, the country will grow 2.3% in 2018 and 2.5% in 2019.

 

 

 

 

Forecasts are good, despite the country’s gross domestic product (GDP) per capita fell to 8,208 dollars in 2016, a downward trend that has been recorded since 2014, which was the year in which this indicator reached its peak of 10,452 dollars, according to World Bank data.

 

At present, Mexico is the main destination of international fashion companies in Latin America. Last year, Spanish group Inditex, owner of Zara, opened 32 stores in the Mexican market last year. H&M, its main competitor, also has targeted the country and is preparing to go live with its Mexican online store.

 

The expansion speed of Inditex in Mexico is not by accident, since according to a report by Euromonitor, the country, together with China, has become one of the largest emerging markets, after the slowdown that is occurring in Europe and the United States.

 

Euromonitor notes that fifty of the most internationally renowned brands are present in the country, where the middle class begins to grow and the construction of shopping malls multiplies. In 2018 alone, 39 complexes will open their doors in the country, adding 1.8 million square meters to retail, according to data from Cbre consultancy.

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