Channel NewsAsia

"MINT" nations: A closer look at Mexico's and Indonesia's economies

Channel NewsAsia takes a closer look at the economies of Mexico and Indonesia, two countries of the so-called "MINT" nations which some see as the world's new powerhouses.

SINGAPORE: Some say the so-called "MINT" nations, comprising Mexico, Indonesia, Nigeria and Turkey, are the world's new powerhouses.

The acronym was coined by asset management firm Fidelity and popularised by economist Jim O'Neill, who also coined the term “BRIC” referring to Brazil, Russia, India and China.

The nations have in common young populations and prime locations but also disadvantages that could jeopardise their economic potential.

Channel NewsAsia takes a look at the Mexican and Indonesian economy to see if they can live up to the hype.

"M" for Mexico

Mexico's location at the doorstep of the world's largest economy is its biggest advantage, with 75 per cent of its exports heading north to the US.

As the US economy rebounds, Mexico will benefit, especially in the manufacturing sector which is closely linked to the US supply chain.

Reforms to free up product and labour markets are helping, and the government has also drastically lowered gas and electricity prices to attract investment, though security remains a risk.

“The security situation is still pretty dire in Mexico, notably in the north of the country where you have lots of drug and cartel violence still taking place and that's going to continue to act as a deterrent to foreign investors,” said Michael Henderson, senior Latin America analyst at Maplecroft.

Mexico's young population -- with an average age of just 28, according to the CIA Factbook -- is what is attracting investors. Domestic consumption is also on the rise.

Of the MINT countries, Mexico has the largest economy of about US$1.2 trillion.

It is also the most mature, with an upper middle income bracket and less space for catch-up growth. The average income is about US$10,000.

Mr Henderson said: “Middle income countries can and do see rapid GDP growth, but the key point to make is that it (GDP growth) is going to have to be a function of productivity gains -- productivity growth, as opposed to... moving labour from the country to the cities -- and that will require serious structural reforms."

"I" for Indonesia

With a population of 246.9 million in 2012 -- according to the World Bank -- Indonesia is the largest of the MINT nations. It too has a young population with an average age of 29, according to the CIA Factbook. 

Billy Gani, a web developer at, fits squarely in that range and is a young entrepreneur -- part of another group seen as crucial to Indonesia's future growth.

Two years ago, he started Civimi -- an online resume website. He said that growth is slow and finding investors is tough.

He said: “If you're doing a real business like selling stuff, having a service or something, it's easy. But for the technology these days in Indonesia, it's still hard. And I don't see it happening in the next year or two years.”

On the other hand, labour costs remain low despite recent increases.

On 1 January 2014, the minimum wage in Jakarta was raised to 2.4 million rupiah. Other provinces across the country have also raised wages, ranging from 10 per cent to 45 per cent.

The average annual income was US$3,420 in 2012 -- according to the World Bank -- and economists say it is rising and strengthening domestic consumption.

The country faces other challenges too. Mining, Indonesia’s top foreign income earner, is beginning to flag as commodity prices drop and a new policy banning raw exports kicks in.

In 2013, foreign direct investment (FDI) hit US$28.5 billion -- an increase of 22.4 per cent on-year, according to the country's investment board.

Indonesia is also vulnerable to capital outflows from US tapering due to its high current account deficit.

The country's current account deficit hit a record 4.4 per cent of GDP in the second quarter of 2013, but has since narrowed to below three per cent. Central bank deputy governor Perry Warijiyo said the current account deficit for 2013 was 3.5 per cent of GDP.

Guiseppe Nicolosi, managing partner of Ernst & Young’s ASEAN advisory, said: “The economy has grown quite dramatically -- US$900 billion of GDP, a growing middle class, a lot of domestic consumption going on -- so the government has become a bit complacent. 

“In my opinion, there are three major elements that will determine sustainability, sustainable development for the country: fiscal policy, monetary policy and investment policy."

But as the country heads into an election season, it is unlikely drastic reforms will happen anytime soon.  

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