Economic growth in Baja California is the highest in Mexico
During the first half of the calendar year 2021, economic growth in Baja California was the highest among all Mexican states.
During the period under consideration, economic growth in Baja California accumulated an aggregate value of US $1.3 billion. This figure represents an annual increase of 59.9% in real terms over the same period in 2020. The activity made expansion in the Baja California economy number one in the nation. This is according to data collected by the National Institute of Statistics and Geography (Inegi).
This result was derived from the 118.6% increase in its primary industry: manufacturing transportation equipment, which contributed 60.8% of the state production value total.
Other substantial increases occurred in the manufacturing output of primary metal industries (28.3%), beverage and tobacco industries (21.6%), and the paper industry (4.9%). However, it is notable that the second most important subsector of the state’s economy, the food industry, fell 4.8% in real annual terms.
Additionally, Baja California, which has all its municipalities operating in the IMMEX program, positioned itself as the second most consistently expanding state entity in Mexico. Economic growth in Baja California was consistent over each of the last 12 months, that is, since October 2020. During the previous year, the lowest growth rate of 8.1 percent was achieved in September. The top state in Mexico for consecutive monthly economic growth during this period was Sinaloa. The primarily agricultural Northwestern state expanded for 13 months.
The recent success story of economic growth in Baja California in the context of the economic and health crisis due to Covid-19 was significantly reflected in the second quarter of this year. During this period, Baja California became the country’s leading recipient of foreign direct investment (FDI) for the first time in the last 15 years. It captured total capital inflows valued at US $1.3 billion. Eighty-one percent of this amount corresponded to new investments. This situation provides a strong indication that investors recognize legal certainty and feel confident when initiating projects in Baja California.
Economic growth in Baja California has resulted in jobs creation
The state policy to attract foreign capital has been thriving in the creation of formal jobs, as well. Economic growth in Baja California was the catalyst for creating 65,203 jobs between February 2020 and July 2021, reports information from the Mexican Institute of Social Security ( IMSS).
Due to this impressive performance, it was the first state entity in Mexico to overcome the ravages that Covid-19 caused within the national labor market.
Manufacturing industries’ role in economic growth in Baja California lies in the fact that it is the most important sector of the border state. Industrial production maintains a participation rate of 30% of its Gross State Product (GSP).
Behind Baja California was Oaxaca, occupying second place in the country. It achieved a real annual growth rate of 58.7% in its manufacturing production in the first six months of 2021. This historical record is highly relevant due to the economic challenges that the southern region of Mexico has been experiencing.
The primary industry of the Oaxacan entity is that related to beverages and tobacco (15.3% contribution in the state total), which registered an annual increase of 26.6% in real terms.
Morelos holds the third position of highest economic growth by a Mexican state. It has achieved an actual annual increase of 45.8% in its manufacturing value. The state also achieved this result due to the rise of 40.6% in the manufacture of non-metallic mineral-based products, the leading industry, with a contribution of 15.6% to the state total.
In general, during the first half of this year, 30 Mexican state entities showed increases in their expansion levels. Although economic growth in Baja California led the way, twenty-three entities registered double-digit growth rates.
The two significant exceptions to this dynamic were the states of Colima (-0.7%) and Nayarit (-5.0%). These two entities failed to register positive growth, despite the low comparison base derived from the pandemic. Across the country, the total increase was 22.3%. This figure represents the best result since INEGI updated the statistics of the Monthly Survey of the Manufacturing Industry in 2013.
Although twenty-one states achieved historical maximums in the first six months of 2021, it should be kept in mind that social distancing efforts to prevent the spread of the virus ended at the beginning of the year, and both essential and non-essential workers were back in the workplace.