Pestle Analysis of Mexico

Political: Mexico is a federal republic, with a multi-party system in place. Elections are held every six years, in which the president is elected from popular vote. Since establishing himself in power in 2012, President Pena Nieto started a program of reforms after securing a pact with the three major political parties. These reforms have targeted education, monopolies, taxation and power production. All these reforms aim to bolster economic growth. Fiscal reforms focused primarily on increasing tax collection, while financial reforms increased access to cheaper credit. Energy reforms invited the private sector to increase development in the sector. However since late 2014, the focus of the government has shifted from these structural reforms towards the enforcement of law and order (Gov.UK, 2014). Corruption scandals also shook the President’s regime, who was forced to launch an investigation into himself. Mid-term elections were held in 2015, where President’s Pena’s party maintained majority.

Economic: According to the World Bank, Mexico is an upper-middle income economy, with a high income disparity. While opportunities for economic growth are still needed, the country has bounced back well from the crash of 2009. The GDP is growing at an average rate of 2.5% annually (Market Research Reports, 2016), despite the economy becoming more open with a wide trade liberalization program. The GDP of Mexico stands at 1.3 trillion USD, mainly coming from services (60% - tourism, transport and communications). Mexico has had an inflation rate of 2.72% in the last year; an all-time low, considering the inflation rates of the previous two decades. The average annual household disposable income was $13,371 in 2013; a gradual rise from the previous years and an annual growth rate of 3.2%. The gross adjusted average household disposable income. The Foreign Direct Investment (FDI) has been maintained at a reasonable level, forecasts predicting FDI of 7 billion USD at the end of the next quarter, and 8.3 billion USD in 2020 according to various think tanks. The USA is a one of the biggest trading partners of Mexico, making the economies of both countries very much intertwined. Exports to USA make up 29% of Mexico’s GDP. After oil, remittances are the biggest source of foreign currency. Mexico is a major receiver of remittances, mostly from the USA, averaging around 20 billion USD annually.

Social: The Mexican society has a small band for the middle class, potentially implying a smaller number of customers for brands to target, leading to price variation to fit the consumer range. However, 78% of the Mexican population lives in urban areas, most notably the 22 million people living in Mexico City. Life expectancy is close to 77 years in Mexico, with a median age of 27 years (World Bank, 2016). This however is expected to shift to 42 by the year 2050, as the predicted number of children under 20 is expected to be equal to the number of adults above 65, then. Considering how at present, there are 9 children for every adult in Mexico, markets involving products for children, for instance toys, are booming right now. However, with the expected shift towards an aging population, these markets are expected to change accordingly as well.

Technological: With the establishment of the Institute of Science and Technology in 2007, there is a visible increasing trend of technology in Mexico. Fresh graduates are now joining educational institutions,