The outlook for Mexico's economic recovery is mostly positive, but the country's agribusiness sector will face challenges, according to a new Rabobank report.
Headwinds for the country's agribusiness sector include animal disease in hogs and poultry and stifled corn production. Rabobank reported that grain production in Mexico recovered from extreme weather events that occurred over the last two years, but corn production remains low.
Mexico's animal protein sector will see positive margins on higher prices for animal proteins and lower costs for feed. But porcine epidemic diarrhea virus is expected to cut into pork production in North America, and avian influenza continues to threaten expansion of Mexico's poultry markets. Beef supplies will be tight due to cattle herd contraction, Rabobank reported.
But Rabobank analysts are forecasting 2.9 percent growth in Mexico's economy, with the most expansion occurring during the second half of 2014.
"We identify five factors that will drive Mexico's growth this year," noted Pablo Sherwell, Rabobank analyst. "Resumption of exports to the US, increased competitiveness of the Mexican manufacturing sector, higher government expenditure, timely public expenditure, and approval of important legislation allowing for structural reform in key sectors. We also anticipate the peso will appreciate slowly but surely, and current pressures on consumer prices will ease, over the course of the year."
