Análisis Actinver Sector and Regional Studies May, 2015 Mexico’s Northwestern region economy CONFIDENCIAL Y DE USO INTERNO 1 Mexico’s Northwestern region Main points General features Page 3 Population Page 4 Working population Page 5 Importance of region economy in the macroeconomic context Page 6 Region’s economy Page 8 Sector participation in national economy Performance of agriculture sector Page 9 Performance of industrial sector Page 11 Performance of services sector Page 12 Foreign Direct Investment Page 13 Region infrastructure Page 14 Maritime ports Page 15 Railways Page 16 Highways and roads Page 17 Competitiveness index Page 18 Industrial Parks Page 19 Company generation Page 21 Commercial banking loans by State Page 23 State participation in NIP, investment projects Page 24 CONFIDENCIAL Y DE USO INTERNO 2 General features Mexico’s Northwestern region • Region concentrates 12.9% of country’s total population (119.71 million to 2014). • The fourth most important region of GDP value totaling MP 1,679,920 million during 2014, with a 12.8% participation. • Economic growth rhythm is above national GDP with a 3.1% rate between 2003 and 2013. • Sonora and Chihuahua are the highest added value economies of the six entities part of the region, together with BC, BCS, Durango and Sinaloa. • Services sector has the highest weight of the regional economy with a 59.30%, followed by the industrial sector with 34.22% and the agriculture sector with 6.49%. • Main activities of the region are focused on the industrial, mining and tourism activities. Although the agriculture sector represents 26.0% of national total. • The region has 166 industrial parks, outstanding BC with 78 and Chihuahua with 38. • With excellent communication routes. It has 19 international airports, 37 ports, 72 thousand Km of roads and 7,234 Km railways. • With 4.7% of loans stake granted by commercial banks to states. Main cities Tijuana, Baja California Ciudad Juárez, Chihuahua Culiacán, Sinaloa Mexicali, Baja California Hermosillo, Sonora State Durango, Durango BC BCS Sonora Sinaloa Chihuahua Durango Ensenada, Baja California Mazatlán, Sinaloa Ciudad Obregón, Sonora Los Mochis, Sinaloa Capital La Paz, Baja California Sur Mexicali La Paz Hermosillo Culiacán Chihuahua Durango Nogales, Sonora San Luis Río Colorado, Sonora Navojoa, Sonora Guaymas, Sonora Ciudad Cuauhtémoc, Chihuahua Baja California Ciudad Lerdo, Durango Baja California Sur Delicias, Chihuahua Chihuahua Guasave, Sinaloa Sonora Guamuchil, Sinaloa Sinaloa Durango CONFIDENCIAL Y DE USO INTERNO 3 Population Mexico’s Northwestern region • Region has 15.45 million inhabitants, in accordance to INEGI’s 2014 figures, representing 12.9% of country’s total population. • Population CAGR of region was 1.3% from 2010 to 2014, rate higher than national total of 1.2%. • Chihuahua is the state with the highest population of 3.67 million, followed by Baja California with 4.43 million, Sinaloa with 2.89 million, Sonora 2.89 million, Durango 1.75 million and BCS with 0.74 million. Population, million inhabitants 2010 2011 2012 2013 2014 CAGR Total National 114.26 115.68 117.05 118.40 119.71 1.2% Total region 14.65 14.84 15.05 15.25 15.45 1.3% Baja California 3.22 3.28 3.33 3.38 3.43 1.6% Baja California Sur 0.65 0.67 0.70 0.72 0.74 3.3% Chihuahua 3.53 3.56 3.60 3.64 3.67 1.0% Durango 1.67 1.69 1.71 1.73 1.75 1.1% Sinaloa 2.85 2.88 2.91 2.93 2.96 0.9% Sonora 2.73 2.77 2.81 2.85 2.89 1.5% Participation regional/national 12.8% 12.8% 12.9% 12.9% 12.9% Source: INEGI CONFIDENCIAL Y DE USO INTERNO 4 Población ocupada Mexico’s Northwestern region • Region has 6.52 million working population, representing 13.2% of the country’s total working population (49.55 million to 2014). Chihuahua has 1.49 million, the entity with the highest participation. Followed by Baja California with 1.48 million, and Sonora with 1.31 million. Working population, million 2010 2011 2012 2013 2014 CAGR Total National 46.89 47.18 49.28 49.55 49.55 1.4% Total region 5.88 5.89 6.28 6.53 6.52 2.6% Baja California 1.33 1.36 1.44 1.49 1.48 2.8% Baja California Sur 0.29 0.30 0.32 0.34 0.34 4.1% Chihuahua 1.34 1.29 1.40 1.48 1.49 2.7% Durango 0.61 0.64 0.64 0.69 0.67 2.4% Sinaloa 1.21 1.19 1.25 1.27 1.21 0.0% Sonora 1.09 1.11 1.23 1.26 1.31 4.8% Participation regional/national 12.5% 12.5% 12.7% 13.2% 13.2% Source: INEGI Working population by state, 2014 0.67 1.21 1.31 1.49 Total National 0.34 Baja California 1.48 Baja California Sur Chihuahua Durango Sinaloa Sonora 49.55 CONFIDENCIAL Y DE USO INTERNO 5 Importance of region economy in the Mexico’s Northwestern region macroeconomic context • Region’s economy represents 12.8% of the country’s total economy, fourth most important region. • GDP added MP 1.69 billion in 2013, against MP 13.12 billion of national total. • The 3 states bordering USA have the highest added value within the region. Sonora has the highest GDP value adding MP 395.4 billion, representing 23.5% of regional total, followed by Baja California with MP 383.5 billion (22.8% regional) and Chihuahua with MP 375 billion (22.3%). Northwestern region participation in national GDP, 2013 % GDP regional Regional/Total Expected GDP growth Center 4,291,532 32.7% 2013 2014 2015 2016 2017 2018 Southeast 2,905,082 22.1% National GDP 1.4% 2.1% 2.7% 3.6% 3.8% 3.9% Northeast 1,801,481 13.7% Northwestern GDP 3.2% 3.5% 3.7% 3.8% 4.0% 4.1% Northwest 1,679,920 12.8% Baja California 0.7% 0.8% 1.0% 1.0% 1.1% 1.1% Center North 1,317,259 10.0% Baja California Sur 2.8% 3.0% 3.1% 3.2% 3.3% 3.5% West 1,283,065 9.8% Chihuahua 5.4% 5.9% 6.1% 6.2% 6.5% 6.8% National GDP 13,121,598 100.0% Durango 2.0% 2.1% 2.2% 2.3% 2.4% 2.5% Millions pesos Sinaloa 1.7% 1.8% 1.9% 1.9% 2.0% 2.1% Sonora 5.3% 5.8% 6.0% 6.1% 6.4% 6.7% GDP, MP millions, 2008 basis 14,000 13,122 12,000 10,000 8,186 8,000 6,000 4,528 4,000 1,680 2,000 996 408 109 575 0 GDP GDP agricultural GDP industrial GDP services National Regional CONFIDENCIAL Y DE USO INTERNO 6 Importance of region economy in the Mexico’s Northwestern region macroeconomic context Main economic activities Baja California Manufacturing Tourism Hospitality Agricultural (agriculture, livestock, fishing) Services Baja California Sur Trading Construction Manufacturing Tourism Hospitality Agricultural (agriculture, livestock, fishing) Chihuahua Manufacturing (maquila) Agriculture Mining Sinaloa Agriculture (Mexico's granary), tourism, and agroindustry. It is the most important agricultural entity of the country due to its GDP added value. And the second larget fishing fleet of the country. Sonora Agricultural (agriculture, livestock, fishing) Mining Surge of maquila industry and agroindustry Strategic sectors (aerospace, automotive, electric/electronics) Durango Mining and tourism CONFIDENCIAL Y DE USO INTERNO 7 Region’s economy Mexico’s Northwestern region • Economy growth dynamics of the northwestern region is higher than total national economy, recording a 3.1% CAGR between 2004 and 2013 against a 2.6% rate of national GDP. • Sonora has the highest value of the region with MP 395.4 billion with data to 2013, 2008 basis. Followed by Baja California with MP 383.5 billion, Chihuahua with MP 375.1 billion, followed in importance by Sinaloa, Durango and Baja California Sur. • As to performance, BCS’ economy has the highest dynamics recording a 5.1% CAGR between 2004 and 2013, followed by Sonora with 4.2% and Chihuahua with 3.2%. Sector participation of GDP 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CAGR National GDP 10,119,898 10,545,910 10,870,105 11,410,947 11,778,877 11,941,199 11,374,629 11,965,979 12,435,058 12,935,715 13,121,598 2.6% Agricultural GDP 360,290 364,847 351,456 373,045 390,308 392,984 377,848 390,856 366,831 397,118 407,528 1.2% Industrial GDP 3,884,165 4,043,151 4,142,410 4,322,843 4,385,686 4,365,207 4,094,017 4,280,609 4,427,598 4,552,813 4,527,815 1.5% Services GDP 5,875,443 6,137,912 6,376,239 6,715,059 7,002,883 7,183,008 6,902,764 7,294,514 7,640,629 7,985,784 8,186,255 3.4% Regional GDP 1,242,396 1,311,025 1,368,641 1,454,842 1,512,375 1,530,370 1,439,982 1,494,913 1,549,724 1,627,605 1,679,920 3.1% Agricultural GDP 88,380 90,547 92,516 97,799 106,559 104,304 102,655 106,196 91,759 105,276 108,991 2.1% Industrial GDP 431,034 463,979 479,968 516,427 531,467 536,746 494,332 500,311 529,856 554,952 574,820 2.9% Services GDP 722,982 756,499 796,157 840,616 874,349 889,320 842,995 888,406 928,109 967,377 996,109 3.3% Regional participation in total sector GDP Agricultural GDP 24.53% 24.82% 26.32% 26.22% 27.30% 26.54% 27.17% 27.17% 25.01% 26.51% 26.74% Industrial GDP 11.10% 11.48% 11.59% 11.95% 12.12% 12.30% 12.07% 11.69% 11.97% 12.19% 12.70% Services GDP 12.31% 12.33% 12.49% 12.52% 12.49% 12.38% 12.21% 12.18% 12.15% 12.11% 12.17% Participation in regional GDP PIB regional 12.28% 12.43% 12.59% 12.75% 12.84% 12.82% 12.66% 12.49% 12.46% 12.58% 12.80% Agricultural GDP 7.11% 6.91% 6.76% 6.72% 7.05% 6.82% 7.13% 7.10% 5.92% 6.47% 6.49% Industrial GDP 34.69% 35.39% 35.07% 35.50% 35.14% 35.07% 34.33% 33.47% 34.19% 34.10% 34.22% Services GDP 58.19% 57.70% 58.17% 57.78% 57.81% 58.11% 58.54% 59.43% 59.89% 59.44% 59.30% Million pesos CONFIDENCIAL Y DE USO INTERNO 8 Performance of agriculture sector Mexico’s Northwestern region • Agriculture sector activity concentrates 26.7% of sector’s total value nation wide, with data to 2013.