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Of all the places vying to be industrial and logistical hubs, San Luis Potosí perhaps lays the best claim to being in the middle of everything. San Luis Potosí is as central as it can be relative to the economic centres of the country. In 2015 the state’s economy expanded by 5.4% compared to 2.6% growth at the national level, putting it in fifth place out of 32 states in terms of GDP growth. Despite unavailable official state figures for 2016, San Luis Potosí is again expected to more than double the nation’s rate of growth, with 2.3% forecast for Mexico and 4.6% for the state. While the uncertainty that has been ushered in with the new US administration may have lowered expectations in the short term, there are several encouraging signs that industrial growth is set to continue apace in the region. Central players in San Luis Potosí’s private sector are, therefore, expecting the region to keep growing for many years. This chapter includes interviews with Juan Manuel Carreras, Governor of San Luis Potosí, Gustavo Puente Orozco, Secretary of Economic Development; and Vicente Rangel Mancilla, CEO, Grupo Valoran, and CEO, Grupo Ranman.

Posting growth of 4.26% in 2015, Nuevo León remains well above the national average of 2.53%, with construction, transport, and financial services and insurance displaying the strongest levels of growth. The 2016 US election results, though, have cast some uncertainty over the future of US-Mexico trade relations. While the US is Nuevo León’s chief trading partner, the state has set its sights on ensuring long-term growth through a variety of initiatives. This includes supporting the mining sector, investing in infrastructure – especially transport and energy – and boosting productivity and competitiveness through investment in research and development, and innovation. Reforms at the federal level are already beginning to open up a variety of markets for private sector participation in the energy industry, with some movement becoming visible in gas and electricity generation, especially in the areas of combined cycle and renewables. Additionally, while the state government is making strides towards balancing the fiscal situation, this has limited its ability to funnel public investment into key projects, increasing the importance of attracting further private investment to move forward with development plans. This chapter features interviews with Fernando Turner Dávila, Secretary of Economy and Labour, State of Nuevo León; and Salvador Alva, President, Tecnológico de Monterrey.

In 2016 the Mexican manufacturing sector achieved annual growth of 1.3%, as many other sectors of the economy experienced a slowdown. Accounting for 16.8% of GDP, the manufacturing sector is the largest contributor to the national economy. Given the sector’s economic weight, the November 2016 election of US President Donald Trump has created a shadow of uncertainty over the Mexican economy. However, such is the dependence of US industry on Mexican imports that drastic measures look unlikely. Whether through a refocus on the domestic market or a diversification of export destinations, Mexican industry has preserved the fundamentals on which it can continue to prosper. Additionally, Mexico has long been a global presence in the mining industry, but since 2012 falling commodity prices, coupled with increased royalty payments, have led to stagnation of both production and investment. In early 2017, however, the recovery of metals prices saw a rise in merger and acquisitions in the global mining industry, and a growing belief that a new bull market could be on the horizon. With huge exploration potential, Mexican mining could soon be back after a hiatus. This chapter includes an interview with Alexander W Wehr, President and CEO, BMW Mexico, Latin America and the Caribbean.

Mexico’s energy sector has been undergoing a profound paradigm shift since a reform programme, launched in 2013, put an end to state monopolies in most subsectors and began the process of opening the production and distribution of oil, gas, petrochemicals and electricity to private investment. In parallel, the entire legal, regulatory and institutional framework is being transformed to oversee new market mechanisms. The fruits of these efforts became more apparent in 2016 when a number of notable developments took place, including two successful long-term electricity supply auctions and a deepwater oil and gas auction for exploration and production in December 2016. A significant challenge going forward will be to ensure that infrastructure is of sufficient quantity and quality for the entire country to benefit from the reform efforts. While the increase in global oil prices and the decline in value of the Mexican peso in the second half of 2016 and into early 2017 will cause further knock-on increases in prices facing consumers of both combustibles and electricity, the same phenomena should give a boost to the energy sector more generally. This chapter includes interviews with José Antonio González Anaya, CEO, Petróleos Mexicanos; Jaime Hernández Martínez, Director-General, Federal Electricity Commission; and Angélica Ruíz Celis, Director-General, Vestas Latin America.

Despite challenges, and as the Mexican insurance sector laboured to meet new reporting standards, signs of strength have been showing in terms of profitability and premium growth. As rising costs were passed on to clients due to the weak exchange rate, some segments – notably health – have seen a rise in premiums. It is expected, however, that regulatory reforms will ultimately limit the rising cost burden faced by consumers. A bigger growth opportunity lies in increasing the penetration rate – currently at half the level of leading Latin American countries like Chile – while the eventual ageing of the still relatively young population bodes well for demand for the whole range of products, particularly life insurance and pensions. After a strong performance in 2016, prospects for 2017 look good but are clouded by the uncertain macroeconomic environment. Factors may vary, but what is agreed is that concrete plans are needed in order to boost the overall penetration rate in the country. This chapter contains an interview with Mario Vela Berrondo, President, Mexican Association of Insurance Companies.

Mexico’s capital markets are tightly regulated, but this has not greatly hampered innovation, with a number of new financial products becoming available to investors in recent years. The sovereign bond market has been particularly well developed over the past two decades, while corporate bond issuances have also been increasing, particularly among leading parastatal companies, such as the state-owned energy giant Petróleos Mexicanos and the Federal Electricity Commission, as well blue-chip private firms. In light of external and domestic economic and political uncertainties, as well as rising interest levels, the Mexican equity market is expected to tread water in 2017. With the introduction of two new financial products aimed at stimulating infrastructure investment in 2016, namely FIBRA E and CerPIs, 2017 will prove a litmus test of their capacity to impact Mexico’s capital markets in the way that FIBRAs and CKDs have in recent years. Overall, however, the capital markets are likely to continue to see positive growth in the years ahead. This chapter includes an interview with Carlos Rojo Macedo, CEO, Grupo Financiero Interacciones.