MEXICO CITY - Forecasters predict 2002 will be a difficult year for Mexico's economy, but the domestic plastics industry still has growth plans.
Mexico's economy shrank about 0.3 percent in 2001, mostly the result of weakness in exports. Mexico sends about 85 percent of its exports to the United States, and has seen its economy suffer the impact of the U.S. slowdown.
However, the plastics industry was robust in comparison, according to Mexico's National Association of Plastics Industries Anipac, which represents 10 percent of the nation's plastics companies. Anipac credits continuing substitution of plastics for glass, metals and other materials, especially in packaging.
``[Packaging] is a sector that, until last year, was seeing 5.7 percent annual growth - and in general, this is still a good, healthy sector, above national average economically,'' said Jorge Martinez, director of the Mexican Association of Bottling and Packaging (Asociacion Mexicana de Envase y Embalaje).
The packaging group has a membership of 80 companies, 63 percent with annual sales of more than 100 million pesos (about $10 million). It is based in Mexico City, but 35 percent of its members are from states elsewhere in the Mexican republic.
``For 2001 we are expecting between 1 and 2 percent growth, and for the coming year it depends on proposed taxes on bottling,'' Martinez said. ``This is a big deal, as it affects 20-25 percent of the sector. If they go ahead, growth could be null, if not perhaps 1 percent. But we can't be sure of what the impact will be.''
On Dec. 31, the Mexico Congress approved wide tax increases, including 20 percent on soft drinks and some other beverages. Mexicans, among the world's biggest consumers of soft drinks, consume some 30 million drinks in PET bottles a day.
Exporters in Mexico are dependent on improvement in the U.S. economy, as well as in Europe and Japan. Rolando Gonzalez Baron, spokesman for Mexico's National Council for the Maquiladora Exports Industry (Consejo Nacional de la Industria Maquiladora de Exportacion AC), noted that his group lost membership in 2001 for the first time since it was founded 26 years ago.
``The companies that left were labor-intensive and preferred to invest in countries like China, which is ... cheaper,'' he said.
Growth is hard to forecast with the information currently available, Gonzalez said. ``The next six months will be very difficult, although we expect to see growth in the third quarter. Some industries have been punished more, for example, electronics.''
He added: ``We have not bottomed out yet,'' and January and February will be especially severe. ``After July, we believe we will see growth again.''
In the latest reports, economic experts foresee a 1.39 percent growth in Mexico's gross domestic product for 2002, marginally lower than official government forecasts of 1.7 percent.
Damian Fraser, Latin American strategist at UBS Warburg, predicts that ``low interest rates, sound fiscal policies and continued integration with the United States should lead to a cyclical recovery in the second half of 2002.''
Gonzalez said added border security is making it more difficult for Mexican firms to export to the United States, but the problem presents a great opportunity for maquiladoras, where 90 percent of exports go to the United States.
``Although products from Mexico used to take 20 minutes to cross the border and now take two hours, from elsewhere it takes a day,'' Gonzalez said. ``Consequently, Mexico is almost unique in providing just-in-time [delivery]. This is a tremendous advantage.''
Despite widespread grumbling at the beginning of the year about tax hikes, industry on the whole seems very happy with President Vincente Fox.
``Mexico has shown it can change powers without a revolution,'' Gonzalez said. ``We have a long way to go, but the foundations for democracy are being laid, and we have to learn from Argentina that democracy has to have a strong social component so this doesn't happen to us.''