Mexico

2016 business cost index

77.5

Country ranking

1st / 10

Mexico, GDP per capita: US$10,326 (2014), GDP growth rate: 2.5% (2015), Unemployment rate: 4.2% (Q4/2015), Inflation rate: 2.1% (2015)
Locations12016 indexRank12014 indexRank1
Mexico77.5181.31
Mexico City78.6281.92
Monterrey76.5180.71
1  Overall results for the country and cities. Rank for Mexico is relative to 10 countries in both 2016 and 2014. Ranks for cities are relative to 111 cities in 2016 and 107 cities in 2014.
 
Sectors2016 indexRank22014 indexRank2
Digital services65.6171.31
R&D services55.3163.41
Corporate services47.2154.01
Manufacturing86.1188.51
2  Rank is relative to 10 countries in both 2016 and 2014.
 
Cost factors3
  • 22.3% currency depreciation against the US$
  • Highest increase in total labor costs among study countries
  • Increase in lease costs for industrial and downtown office space
  • Decrease in freight costs, for both surface and air
  • Decrease in utility costs, for both electricity and natural gas
3  Significant cost trends between 2014 and 2016.
 
Exchange rate sensitivity4IndexChangeRank5
20% appreciationUS$1 = MX$13.4181.0-3.51
20% depreciationUS$1 = MX$20.1175.2+2.31
4  "What if" sensitivity scenarios based on appreciation or depreciation relative to the US dollar.
5  Rank among 10 countries assuming equal appreciation/depreciation of all currencies relative to the US dollar.

Locations

National results for Mexico reflect the combined results for two major cities: Mexico City and Monterrey. Total business costs in Monterrey are 2.1 percentage points lower than in Mexico City. Since 2014, suburban office lease rates have increased in Mexico City and declined in Monterrey. Mexico City has also seen higher relative growth in wages while Monterrey has experienced a greater relative reduction in transportation costs. As a result, the cost differential between the two cities has grown from 1.2 percentage points in 2014 to 2.1 percentage points in 2016.
 

Sectors

As the only high growth (emerging) country included in the study and consistent with its overall ranking, Mexico ranks first among the 10 countries in all sectors. Mexico sees its greatest cost advantage relative to its northern neighbor in the corporate services sector, with total business costs less than half of those in the US. Mexico sees higher cost savings for lesser-skilled clerical and administrative staff relative to highly skilled professional and technical staff, driving its greater cost advantage in the corporate services sector.
 

Cost factors

The rise in value of the US dollar relative to the peso in 2015 is the primary driver of Mexico’s improved cost index results in 2016. However, other cost trends as noted in the table also contribute to Mexico’s overall results in the current study.
 

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