Can Mexico reclaim title as region's largest economy from Brazil?
Mexico was once Latin America’s darling, but in the past decade Brazil has far surpassed it as commodities drove economic growth. President-elect Peña Nieto is eager to reposition Mexico.
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Latin American giants
The relationship is not without tension. Mexico was once Latin America’s darling, but in the past decade Brazil has far surpassed it. Commodities drove economic growth, earning it a spot in the BRIC club (Brazil, Russian, India, and China) – the emerging economies to watch, while Mexico’s stable-but-sluggish growth seemed lackluster by comparison. As Mexico faces dwindling oil reserves, Brazil has made a giant oil find. As Mexico’s drug-related violence has been aired around the world, Brazil’s anti-crime initiatives in Rio de Janeiro have been applauded globally.Skip to next paragraph
“I have the sense that we are a lot freer in Brazil,” says Iolanda Villard, who works at the federal tax agency. “Mexico is so dangerous because of the violence of drug traffickers.”
Mexicans lament the fact that, although Mexico is safer overall when compared with other countries in the region (including Brazil), media coverage tends to focus on the drug violence there. According to a 2011 United Nations report on global homicide rates, Mexico’s homicide rate stood at 18.1 homicides per 100,000 people, while Brazil’s hovered at 22.7 per 100,000.
Mexico's economy is also slated to grow at a faster clip than Brazil's this year. A survey of analysts by Mexico's central bank estimates GDP growth above 3.5 percent in 2012, while growth estimates for Brazil have been scaled back to just over 1.5 percent this year.
As Peña Nieto’s team was trying to get him to the presidency, they recalled stronger economic growth in Mexico when the PRI was previously in power. A financial adviser bristled when a reporter questioned the rise of Brazil: He pointed to oft-cited statistics showing that Mexico’s economic growth could surpass that of Brazil. Mexico’s comparably low wages and proximity to the US market make the country increasingly attractive again to manufacturers as wages rise in China.
Lately financial analysts have started saying it is Mexico that is the “new” Brazil.
But Brazilians disagree. "From an economic standpoint, Brazil is the leader," says Andre Delmonte, a civil engineer, working on the Maracana stadium that will be a venue for the 2014 World Cup. He agrees with Ms. Villard that Brazil has reduced violence in a globally noteworthy way.
He says he feels no rivalry with Mexico but understands their sensitivities about calling Brazil boss. "It is normal to want your country to be the leader," Mr. Delmonte says.
Mexico did recently earned one set of bragging rights over Brazil: Mexico’s men’s Olympic soccer team trounced Brazil 2-1, winning its only gold medal of the Games and blocking the five-time World Cup champion from the Olympic soccer gold it has yet to achieve.
Peña Nieto plans to visit Europe in October and the US in November.