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Mexico’s banking industry enjoys high capital adequacy ratios and is benefitting from robust profit margins. While some stakeholders have pointed to the sector’s conservative approach as a reason for the slow progress in increasing penetration levels, the sector is in fact expanding financial services to a broader share of the population. Relative to the size of the Mexican economy, the country’s banking sector remains fairly small, dominated by a handful of large international bank groups. Banking profits climbed by 31.5% in 2017 to reach $7.4bn, and domestic credit to the private sector, including banking and non-banking sectors, reached 34.2% as a percentage of GDP in September 2017. The sector has also been successful in implementing various Basel III regulations, with major banks adequately adhering to capital and liquidity requirements. This chapter features an interview with Alejandro Díaz de León Carrillo, Governor, Banco de México.

Mexico’s transport sector is undergoing major expansion, providing increased investment opportunities. Among the ongoing projects is a $13bn international airport in Mexico City, which was originally slated for completion in 2020 but is likely to be delayed until 2023. Work is also under way on a new urban metro system in the capital, and upgrades to the railway and road system. In addition, freight capacity has been expanded at the Pacific seaports of Lázaro Cárdenas and Manzanillo, and major expansion projects are being undertaken at the port of Veracruz. While concerns remain over the impact of the North America Free Trade Agreement renegotiation, the outlook for the Mexican transport and logistics sector remains solid. Mexico has already achieved significant increases in capacity across all segments of its transport system, and while inefficiencies and security concerns will not be resolved overnight, there is momentum to overcome these challenges. This chapter includes an interview with Federico Patiño Márquez, CEO, Mexico City Airport Group.

Traditionally a barometer of a Mexico’s economic health, the construction sector saw investment slow in 2017 as a result of a dip in public spending on infrastructure works and uncertainty among private investors over the possible outcome of the renegotiation of the North America Free Trade Agreement. This could further push up the already rising costs of materials brought by the February 2018 hike in interest rates to a nine-year high of 7.5%. Although the sector will continue to gain steam in 2018, such growth will be tepid, given that the factors impeding expansion remain. The real estate sector of Mexico saw record occupancy in 2017. Competitiveness as a manufacturing hub and job growth is fuelling a hike in demand for residential properties and retail space. The expanding population is also driving continued growth in housing demand, as the housing shortage remains above 25%. These factors are all solid indicators of a market that is far from saturated, demonstrating substantial opportunities for investment and growth. This chapter contains an interview with Luis Gutiérrez Guajardo, President, Prologis Latin America.

Performance in Mexican industry is heavily dependent on the particular segment in question and its current economic position. The automotive and aeronautics manufacturing sectors, concentrated mostly in the Bajío region of Mexico in the states of Querétaro and Guanajuato, are driving demand for inputs like light-weight polymers, while strong growth in agro-industry across different regions of Mexico is pushing up demand for petrochemicals and chemical fertiliser products. Export growth and the domestic market consolidation of the beer industry are pushing production of barley and malts upwards, contributing to more efficient farming practices and greater agricultural yields. While the mining industry has been suffering from low worldwide commodities prices for over five years, the sector’s growth potential is expected to make a rebound in the coming years. This chapter includes an interview with Guilherme Loureiro, Executive President and CEO, Walmart México.

While renewed interest in promoting research and development has meant Mexico is performing well on global indices, lower budgets in 2017 and 2018 mean the government will be looking to continue incentivising private investment, while encouraging universities to maintain their work to advance the sector. While Mexico has a strong background in innovation, fostering new research and auctioning new ideas may require structural change. As the incoming administration of Andrés Manuel López Obrador, of the National Regeneration Movement, takes office in December 2018, entrepreneurs will be hoping that the new government recognizes the significant contribution that innovation and technology make to economic development. This chapter features an interview with Enrique Cabrero Mendoza, Director-General, National Council of Science and Technology.

As several important segments of the country’s energy industry open up for competition, widespread energy reform is leading to significant changes that go well beyond the sector. New investments and private operators are helping to change the economic structure of the country, in a sector often highlighted for its significant potential. The energy sector is well positioned to receive additional private investment and technical know-how for its future development, but for ongoing reforms to be successful in the long term, continuity of the regulatory framework will be an essential component. This chapter includes interviews with Carlos Treviño Medina, CEO, Petróleos Mexicanos (Pemex); Ivan Sandrea Silva, CEO, Sierra Oil and Gas; and Miguel Ángel Alonso Rubio, CEO, Acciona Energy.