墨西哥供应链机遇

Geopolitical

context

andnearshoring:

Exploring

SupplyChain

Opportunities

in

MexicoJorge

SiciliaNovember,2023Index01

GeopoliticsisbecomingakeyeconomicdriverGlobalValue

ChainsandCompetitive

AdvantageoftheMexicanManufacturing0203

RegionalinvestmentopportunitiesinMexico01Geopolitics:akeyeconomicdriverA

complexgeopoliticalenvironmentthatwillbringaboutlowgrowth,disruptions,ahostoftensions,andsome(mostly)localopportunitiesBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico4Persistent

shocks

and

failures

are

threatening

decades

of

Great

ModerationTHE

GREAT

MODERATIONANDA

VIRTUOUS

“END

OF

HISTORY”PARADIGMFAILURESA

STORM

OFSHOCKSCovidWarLiberalizationCollaborativeGeopoliticsExcessiverisktakingGFC*RisingmultilateralismDigitalizationandpeacedividendsPolarizationandPopulismHigherwithin-countryinequalityDemogra-phicsClimatechallenge*GreatFinancialCrisisandsubsequentSecularStagnationBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico5Multiple

conflicts

are

brewing

across

several

dimensionsIdeologicaland

culturalResources(energy,

rareearths,water)Economic

/TechnologicalMilitaryIsrael-HamasLOCAL/GLOBALTaiwan

(US-China)

GLOBALUkraine(Russia-West)

GLOBALIran-WestGLOBALSiriaLOCALNorthKoreaEU-ChinaLOCAL/

GLOBALGLOBALImmigrationtoEUGLOBALLOCALImmigrationtoUSGlobalterrorismGLOBALBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico6The

war

in

Ukraine

has

uncovered

today’s

ideological

fault-lines

(some

countries“preferring

not

to

take

a

side”,

others

doing

it

reluctantly),

…Israel

and

Gaza?“The

world

is

up

to

be

lured”:

a

carrot-and-stick

new

environment

in

global

relations

Thisnewgeopoliticalrivalryislikelytoleaddominantcountriestolure&pushemergingcountries(largeonesarebecomingincreasinglyassertive)tolure&pushthemtobringthemtotheirpositions(leverages:vote,resources,military)BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico7Geopolitical

Risk

has

increased

with

the

Hamas-Israel

war

with

somespillovers

to

Western

CountriesGermanyUSAIndiaMéxicoThegeopoliticalsentimentanalysisshowsextremelevelsofriskandsomecontagionintermofproteststosomeWesterncountries.SpainalsoinfluencedbyLocalProtestsBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico8The

emergence

of

a

new

geopolitical

environment

may

brew

a

morepermanent

shift

of

paradigmFROM

VIRTUOUS

TO

VICIOUS

GEOPOLITICSClimatechange/TradeSustainabilityConfrontationalGeopoliticsDemographicsDigitalizationBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico9LIBERALIZATIONLIBERALIZATIONTrade

goods

&

services

has

transited

from

hyperglobalization

toslowbalization;

trade

fragmentation

is

a

growing

riskSinceCovid-19,warinUkraine,Trade

policyguidedby:TRADE

OPENNESS,

1870-2021(SUMOFEXPORTS

ANDIMPORTSOFGOODS

ANDSERVICES,%GDP)●

“New”goals:

securityanddiversificationanewaxisvsefficiencyandglobalization●

“New”rhetoric:friendshoring,nearshoring,de-risking,strategicautonomy…●

Increasingprotectionism/interventionismmeasuresTrade

fragmentationtobecostly*Source:PIIE,

IMF(*)IMFwp

and

blog,

EBRD,

CEPR,

UNCTADBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico10Digitalization

poses

important

challenges:

Strengthening

cybersecurity,AIDataacrosscountriesdoubleseverytwoyears,

whileinternationalcoordinationremainsfracturedPotentiallydisruptivethreatsof

AIwhichpolicymakersarestartingtoaddress.GLOBAL

FLOWS(2021volumesand2010-2021growthratesinCAGR%)FOUR

PILLARS

DEMANDINGDIGITAL

SECURITYEconomiclosses,reputationaldamages,▰▰Surveillance

and

privacyintellectualpropertytheft,privacyandhumansafetydamagesHallucinations

andcyber-securityEconomic&

socialprosperityInformationsecurity,Infosec,datasecurity,etc.▰▰Intentional

misinformationand

reinforcement

ofbiases.National

andinternationalsecurityTechnologyLabor

replacementwithout

labor

enhancingLawenforcementCyberwarfareCyberdefenseCyberespionnageCyner…,etc.CybercrimeSource:McKinseySource:OECDBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico11Demographics:

Ageing

progressively

extends

to

EM

countries,

implying

thatthe

growth

potential

of

the

labour

force

is

lowerPROJECTIONS

OF

LABOUR

FORCE

GROWTHMEDIAN

AGE

OF

POPULATION,

2021.UNDER

DIFFERENT

SCENARIOS

OF

PARTICIPATIONRATESource:BBVA

ResearchowncalculationsbasedonUNPopulationforecastsandILOBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico12Climate

change

policies

are

shaped

by

geopolitics

-US

vs.

EU-:US

relies

on

subsidies

and

protectionism

rather

than

carbon

pricingFORECAST

OF

GHG

EMISSIONS

REDUCTIONS

IN2030

vs.

2005

(pp)▰IncreasedambitionofclimatepoliciesintheUSandtheEU.Defininglong-termorientedclimateplansandobjectivesreducesuncertaintyandfosterinvestmentdecisions.

Allinall,emissionsexpectedforecastshavenotchangedtoomuch▰ClimatepoliciesareshapedbyGeopolitics:uncoordinatedandwithhighereconomiccosts,especiallyiftheyareprotectionist,asUS’sclimatepoliciesareRangepriortoIRA&Fitfor55●Subsidiesrace,intheUSwithIRA,inEuropeeasingStateaidrules(includingthepossibilityof“fillingthefundinggap”)Currentrange●Whowillspendmoreonclimate,theU.S.orEurope?It’suncertain,butintheU.S.thereisquickerandcertainimplementationoffiscalspending,grosslyopenended.Source:BBVAResearch,Rhodium

Group,and

Climate

ActionTracker.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico13Confrontational

geopolitics

can

permanently

alter

all

drivers

of

growth▰

Friendshoring

and

nearshoringTradedeliberalization▰

Protectionism,

subsidies;

fiscal

and

regulatory

intervention▰

Investment

in

key

sectors

(energy,

defence,health,high-endtechnology)▰

Governmentsmovetoreshore

the

up-stream

production

of

digital

goods

andDigitalizationservices▰

Ageingwillhaveadrasticimpactalsoinmanynon-developedeconomiesAgeing/Labour▰

Labourshortageswillneedtobeaddressed:(i)higherparticipation;(ii)immigrationflows▰

Collaboration

with

China

is

key

formanyplayersgivendominanceofrareClimatechangeearths

and

renewable

energy

capital

goodsBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico14Bilateral

relations

with

Russia

remain

tense;

there

is

some

relaxationof

China’s

stance

against

Taiwan

and

of

US-China

relationsTheBilateralSentimentIndexesremainathighriskagainstRussiabutatthesametimethebilateraltensionsofChinaagainst

Taiwan

haveeasedandarelesscorrelatedwithUS-ChinaRelations02GVC&CompetitiveAdvantageoftheMexicanManufacturingMexicanglobalmanufacturingisreadytocompeteininternationalmarketsandhasledthewayofMexicosurpassingChinaastopUStradepartnerBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico16Mexican

manufacturing

is

globally

competitiveREVEALED

COMPARATIVE

ADVANTAGE

(RCA)MEXICAN

GLOBAL

MANUFACTURING

RCA(NORMALIZEDRCA

INDEX)(NORMALIZEDRCA

INDEX)Mexico:GlobalmanufacturingTop

1/Top2SectorRCARankingRCACountryTextile

Mills0.44-0.26-0.080.060.12-0.690.610.190.730.480.830.790.570.930.590.629493720145720.90.8CambodiaLatviaWoodProductsPaperandprinting0.510.640.520.880.620.5FinlandRussiaSingaporeIrelandChinaPetroleumandCoalProductsChemicalManufacturingPharmaceuticalproductsPlasticsandRubberProductsNonmetallicMineralProductsPrimaryMetal6China10.6ChileFabricatedMetalProductsComputerandElectronicProductsElectricalEquipmentandComponentsMachinery20.490.940.910.660.560.8SloveniaChina22China2ChinaTransportationEquipmentMiscellaneousTransportationEquipmentMiscellaneousManufacturing1CzechrepChina2Source:BBVA

ResearchwithdatafromOECDRCA

comparestheweightthatacertainsectorhasinthetotalexportsofaneconomy,anddividesitbytheweightthatthesamesectorhasinworldexports.30.77ChinaMexicanglobalmanufacturinghaswhatittakes,intermsofcompetitiveness,toseizeashareoftheU.S.productionchain.Therearealsorelativeadvantagesintransportationandlogisticsservices.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico17Mexico

gains

ground

in

the

US

market

against

ChinaU.S.

GOODS

IMPORTS(USD$BILLIONS,CURRENT

PRICES)201820192020202120222023JanuaryUS-ChinaPhaseOnewentintoeffectFebruaryYellen:

“Tariffson

China

willremain”2018-2022JulyUS-China

Strategicand

EconomicDialogue

(S&ED)

issuspended830newcompaniesarrivewithinMexico’sAMPIP

industrialparks;20%ofthemfrom

Asia*FebruaryMarchMarchAprilAugustU.S.TreasurynamesChina“currencymanipulator”JulyUStariffMexicoovertookChinaas

America'slargesttradingpartnerUSbansUSMCAtoenteredIntoForceChinatariffs25%on545US25%steeland10%onaluminumHuaweiproductsSource:BBVA

ResearchwithCensusdata*BBVA

Research-AMPIP

surveyBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico18Manufacturing

has

lead

the

way

of

Mexico

surpassing

China

as

top

US

tradepartnerMEXICAN

GROWTH

COMPARED

TO

CHINA’S

BYAGGREGATE

FDI

IN

MEXICO:

HEAVY

MANUFACTURINGSUBSECTOR

(JAN18-MAY

23GROWTH%)(VAR.

%BETWEEN2018-2022vs2013-2017)Source:BBVA

ResearchwithdatafromCandInegiThetop10MexicansubsectorswiththemostgrowthinrelationtoChinaareinmanufacturing(transportationEquipmentleadsgrowing23.4%):ComputerandElectronicmanufacturingisthebestperformingsectorintermsofFDIinflow.Fromaregionalperspective,theNorthwestandNortheasthavethelargestFDIinflows.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico19Tw

o

channels

to

grab

market

share

from

China

in

G7

countriesSUPPLY

CHAIN

CS

DIRECT

COMPETITION

CHANNELSSupply

ChainChannelSupply

Chain

Channel:economiesthatmighttakeadvantageofbeingChina'ssupplierstosupplyG7directlyDirect

Competition

Channel:economiesthatthatalreadyconductedhead-to-headcompetitionwithChinaDirectCompetitionChannelSource:BBVA

ResearchBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico20Where

to

relocate

under

the

two

channels?(*)2022Q3Source:BBVA

ResearchbasedondatafromHaver,CEIC,IMF03RegionalinvestmentopportunitiesIndustrialparksinMexicowithpositiveoutlookto2025despiteenergyconstraints.NearshoringisanopportunityforMexicotoshifttheirenergypolicy.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico22North

and

west-central

states

are

prepared

to

capitalize

nearshoringTRANSPORTATION

EQUIPMENTCOMPUTER

AND

ELECTRONICSMANUFACTURING

GDP

2021

(BILLIONS(FIRMSDISTRIBUTION)(FIRMSDISTRIBUTION)OFCONSTANTPESOSMXN2018;SHARE%)Source:BBVA

ResearchwithInegidataNorthweststates(BajaCalifornia,Chihuahua,Coahuila)arelocatedclosetotheUSWestCoastandaregloballycompetitiveinComputerandElectronics,MachineryandEquipment.

TheNortheastiscloseto

Texas

andtherestofthe

USEastCoast,withpotentialin

TransportationEquipment,MachineryandEquipment,andBasicMetals.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico23West-central

states

with

technological

manufacturing

potentialELECTRONICS

PRODUCTION

IN

2018STEM

QUALIFIED

LABOR

SUPPLY(BILLIONSCONSTANT

USD

ANDSHARE%)(STEMGRADUATES

/100GRADUATES)19.8%40.5%21.0%Note:China+:GlobalManufacturing,China-:Non-Global,Mexico+:GlobalManufacturingSource:BBVA

ResearchwithdatafromtheNational

AssociationofUniversitiesandInstitutionsofHigherEducation(Anuies)STEM:Science,

Technology,

Engineering,andMathematicsThereconfigurationoftheglobalmicroprocessorvaluechainopensupopportunitiesfortheWest-centralregion.Jalisco'sspecializationintheexportofelectroniccomponents,and

knowledgehub,makeitanidealcandidatefortheexpansionofhigh-techmanufacturing.

Thismayboostthedemandforqualifiedlabor(STEMgraduates)BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico24BBVA

Research

-

AMPIP

survey

recognizes

a

positive

but

moderate

pattern

ofnearshoring

effects

in

terms

of

attracting

firmsORIGIN

OF

ENTRANT

FIRMS

FROM

2018

TO

2022FIRMS

IN

AMPIP

INDUSTRIAL

PARKS

BYMARCH

2023

(%(%OF830NEWFIRMS)OFFIRMS)Source:BBVA

Research

AMPIP

survey(Mexican

AssociationofPrivateIndustrialParks).Lookingforwardto2025,demandgrowthofindustrial-real-estateisexpected:

AMPIP

membersestimatetoreceive453firmswithinthenexttwoyears,20%ofwhichareChinese.

Anaverageof227newcompaniesperyearbetween2023-2025,thiswouldrepresentanannualgrowthof9.1%overthe2018-2022period.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico25From

January

to

June

2023,

the

main

origin

countries

of

FDI

in

México

wereUS

(US$12.4B),

Spain

(US$4.22B),

and

Germany

(US$2.55B)FDI

IN

MEXICO

BYTYPE

OF

INVESTMENTFDI

IN

MEXICO

BYCOUNTRY

OF

ORIGIN(BILLIONSUSD)(SHARE%OF

TOTAL

FDI)Source:BBVA

ResearchwithdatafromMinistryofEconomy,MéxicoBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico26Mexico

would

have

grown

up

to

an

additional

1.8%

per

year

from

2018

to

2022if

it

had

captured

all

the

foregone

Chinese

productionGDP:

%

ANNUAL

CHANGE

AVG:

2018

-

2022GDP:

%

ANNUAL

CHANGE

AVG:

2018

-

2022(PERCENTAGEPOINTS)(PERCENTAGEPOINTS)SectorObservedEstimatedBBVA

ResearchTotal

GDP-0.401.42Agriculture,Fishing0.451.47Mining,OilandGasMinerals-2.620.06-1.39-0.270.691.280.810.67-0.053.721.640.806.962.801.291.23EnergyUtilitiesManufacturingWholesaleTradeRetailTradeTransportationSource:BBVA

ResearchwithdatafromCandInegiHadMexico

reactedearliertotheUS-Chinatradewarwithastrongpolicytoattractandretainglobalproduction,growthinMexicowouldhavebeenlarger.

ThissimulatedscenariorepresentsanupperboundoftheforgonepotentialbenefitofnearshoringbyassumingalltheproductionthatChinalostwasdrawntoMexicoBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico27Mexico

is

highly

attractive

for

relocating

firms

due

to

its

strategic

location,domestic

market,

manufacturing

potential

and

commercial

integrationECONOMYLABOR

MARKETGDP:

14th

place

worldwide

in

20222nd

in

Latin

AmericaMexicoamongthe15largesteconomiesinthelast20years.Economically

active

population:60.3%in2022vs59.7%in201914

FREE

TRADE

AGREEMENTS50

COUNTRIESGraduatestudentsin2022:892,836+19%comparedto2015Mexico

is

currently

the

mainsupplier

of

the

biggest

economy15.5%ofthetotalUSimportsfrominthefirsthalfof2023FOREIGN

INVESTMENTSTEM:

25%

of

total

grads

in

202229

Billion

USDJan-Jun2023INDUSTRYIncomingFDI:UnitedStates(12.3B$USD),Spain(4.2B$USD),Germany(2.5B$USD).9

Mexican

manufacturers

areamongthetop3basedontherevealedcomparativeadvantageindex.USMCANorth

America

accounts

for15.4%

of

global

commerce(exports+imports)MUSTSINTERNATIONAL

TRADEMexico

must

improve

clean

energysupply,

water

access,

and

logistics(ports,

roads,

rail,

customs)Trade

(%

of

GDP):

89.4%MainsupplierofUSimportsJan-Jun2023Source:WorldBank,Census,SE,Banxico,Inegi,IMSS,Infonavit,

AMPIP,

SEGeopolitical

context

and

nearshoring:Exploring

Supply

Chain

Opportunitiesin

MexicoJorge

SiciliaNovember,2023ANNEX

1BBVA

andmanufacturingcreditinMexicoBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico30Annex

1:

BBVA

has

significantly

increased

its

share

in

the

Manufacturingcredit

market,

peaking

35.6%

at

the

beginning

of

2Q23CREDIT

TO

MANUFACTURING

&

SELECTEDCREDIT

TO

MANUFACTURINGSUBSECTORS

(ANNUAL

%VAR.)(BILLIONSOFCONSTANT

MXN;

BBVA

SHARE%RHS)Source:BBVA

ResearchbasedonBanxico,CNBVCredittotheManufacturingsectorgrewsteadilyfrom2Q22to1Q23,averaginganannualvariationof4.9%inrealterms.During2Q23weobserveaslightcontractionexplainedbythedropincreditdemandfromleadingsectors;whichrepresent60%ofthesector.NPL

ratiointheManufacturingsectorremainslow,

anaverageof2%during23H1.BBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico31Annex

1:

Credit

to

the

Transportation

sector

slows

down

with

the

exception

ofTruck

Transportation

and

Support

ActivitiesCREDIT

TO

TRANSPORTATION

EQUIPMENT

SECTOR(BILLIONSOFCONSTANTMXN;

NPL

RATIO

%RHS)CREDIT

TO

TRANSPORTATION

EQUIPMENT

BYSUBSECTOR(ANNUAL

%VAR.)Source:BBVA

ResearchbasedonBanxicodatesBysubsector,

TruckTransportationshowspositivevariationssince21Q3,therestofthesubsectorsremaininnegativeterritory.Inparticular,thecreditto

Air

Transportationremainsindouble-digitcontraction.

Defaultratewithinthesectorremainlow,

closing2021atanaverageof2.6%(Jan-Jun).ANNEX

2USandEUclimatepolicyexpendituresBBVA

Research/EconomicOutlook,geopoliticalcontextandnearshoring:ExploringSupplyChainOpportunitiesinMexico33Annex

2:

US

and

EU

Climate

Policies:Falling

Short

on

Efficient

Decarbonization

amid

Geopolitical

Ambitions▰TheUSandtheEUareplaningincreasesofclimatepublicfinancing,thatmayendupbeingevenhigherintheUSgiventheirdifferentinstrumentsandimplementation.CLIMATE

POLICIES

IN

THE

US

AND

THE

EU.

PUBLIC

FUNDINGPOTENTIALLY

AVAILABLE(%GDP

at2018prices(*))▰▰TheUS’smainlybasedontaxincentivestoattractinvestmentswithalreadycommittedpublicspendingandclearrequirementsthatgiveitcertainty.TheEUarestillpotentialprojectstobedefinedandthereisariskthatthemoreimmediatefunds,thoseofthememberstates,maynotachievethedesiredeffects.EuropeneedsharmonizedandeffectiverulestoimproveitsindustrialcompetitivenessSource:BBVA

ResearchwithdatafromtheEuropeanCommission,CBO,CreditSuisse,andIMF.“US

and

EU

Climate

Policies:

Falling

Short

on

Efficient

Decarbonization

amid

Geopolitical

Ambitions”.BBVA

Research.March3,2023(*)

Total

publicfinancing,inlocalcurrencyat2018prices,isdividedbylocalcurrencyGDP

in2018,thusadjustingtheamountsforexpectedinflation.2018istheyearselectedbytheEuropeanCommissionasthereferenceyear,andthereforetheUSdatahasbeenadjustedtobecomparable.

Thesefiguresmaydifferfromthosepublishedbyotherorganizationsduetomethodologicaldifferences.(**)

Abouttwo-thirdsofthefundsmobilizedbytheIRA

arenotlimited,sothe1.5%estimatedbytheCBOcoulddoubleaccordingtoCreditSuisse'sestimates,orevenhigherasregardsPenn

Wharton

Budget

Model

estimations

asof

April27,2023(***)InthecontextofthereviewoftheMultiannualFinancialFramework2021-2027,theCommissionintendstolaunchtheEu