TRENDS I M P
Mexico the Leader as Brazil, Argentina Try
to Find Footing; Forecast of 0.9% Decline
in 2015, 1.9% Growth in 2016
Mexico’s factories continue to expand and the
country is expected to be the manufacturing growth
leader in Latin America through 2016, according
to a report from the MAPI Foundation, the
research affiliate of the Manufacturers Alliance for
Productivity and Innovation.
The Latin America Manufacturing Outlook is a
semiannual analysis that examines the latest trends
and provides a near-term forecast for 14 major
The report, authored by Fernando Sedano, Ph.D.,
MAPI Foundation economic consultant, focuses on
Latin America’s three largest economies — Brazil,
Argentina, and Mexico — as these countries are
responsible for more than 80% of the manufacturing
output in the region.
Sedano forecasts that overall manufacturing
output in Latin America will decline 0.9% in 2015
and increase 1.9% in 2016. The latter is a modest
improvement from 1.8% growth anticipated in the
foundation’s December 2014 report.
“The regional picture masks sizable differences
across countries,” Sedano cautions. “There is a
deeper than expected recession in Brazil that
is offsetting the solid performance of Mexican
factories. Argentina’s manufacturers are also in
recession, but it is milder than Brazil’s.”
In developing his forecast, Sedano uses data from
national statistical agencies, assigning weighted
average annual production indexes for each industry.
The weights are determined by a country’s value-
added in U.S. dollar terms in each sector, using a
proprietary econometric model.
Brazil’s manufacturing industry (48.7% of the MAPI
Foundation’s regional index) saw its output decrease
by 8.4% year over year between January and April
2015, including an alarming 21.3% decline in motor
vehicles production, the sector at the heart of the
The MAPI Foundation forecasts that Brazil will
see a 3.8% manufacturing production decrease in
2015, down from 1.6% growth anticipated in the
previous report. Sedano predicts a timid rebound of
0.7% growth in 2016, including some improvement
in the carmaking sector that will barely push most
intermediate industries out of recession.
Conversely, the automotive sector remained the
growth engine in Mexico, expanding output by
11.1% in the January-April year-over-year period. Its
manufacturing output ( 38.7% of the index) increased
by 3.2% in that period, with the automotive sector,
fabricated metal plants, and rubber and plastics
producers showing above-average output gains.
The expectations of stronger manufacturing growth
in the U.S. next year are positively affecting Mexican
forecasts. Sedano anticipates 2.8% expansion in 2015
and a 3.4% advance in 2016. The December 2014
forecast was for growth of 2.8% in 2015.
Argentina’s manufacturing prospects ( 12.6% of the
index) will remain stagnant. Brazil’s auto problems
are cascading into Argentina, as carmakers there ship
60% of their production to Brazil. Muted domestic
demand is also a problem. The MAPI Foundation
forecasts a contraction of 0.9% in 2015 and a weak
1.8% expansion in 2016. The December 2014 report
The Manufacturers Alliance for Productivity
and Innovation (MAPI) is a member organization focused on building strong leadership within manufacturing, and driving the
growth, profitability and stature of global
manufacturers. Read the most recent global forecasts from MAPI, as well as how U.S.
manufacturing fits into the mix.
MAPI Weighs in on
Mexico, U.S. Deficit, c t
and China Surplus S