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Goldman Sachs Expect Mexico To Be Main Beneficiary Of Near-Shoring Trend

MEXICO
  • Goldman Sachs note that there are several channels through which LatAm could benefit from the ongoing relocation of manufacturing clusters and the repositioning of global value-added chains. They estimate that the near/friendly-shoring opportunity for LatAm could lift manufacturing exports by roughly $90bn (1.6% of GDP), with a 7.3% boost to overall exports.
  • By their calculations, Mexico would be the main beneficiary with an estimated $71bn increase in manufacturing exports (4.0% of GDP). They note a number of comparative advantages, including competitive/low unit labour costs, a large manufacturing base highly integrated with US, and proximity to the US. Furthermore, Mexico benefits from trade and investment preferences and protections under the USMCA.
  • Mexican exporters have already been gaining market share in the US, recently surpassing China as the top exporter of manufacturing goods to the US. However, to ensure that the near-shoring opportunity translates to transformational growth and development, GS believe that it needs to be levered by reforms to overcome perennial impediments to capital formation and productivity growth.
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