During a Twin Cities visit, Mexico's central bank chief painted an upbeat picture.
The head of Mexico's central bank said Friday that his country has weathered the global financial crisis and emerged with a healthy and growing economy, but the downturn has taught Mexico that it must be less reliant on exports to rich nations.
"We as Mexicans cannot depend on positive assumptions of growth in the advanced economies," said Agustin Carstens, the governor of Bank of Mexico, in an interview. "We need to think more what can we do to improve the effectiveness, the efficiency of Mexico, and how can we stimulate more domestic demand."
Carstens, who spoke to the Economic Club of Minnesota, arrived in the Twin Cities with a raft of good news about the Mexican economy.
Rising Chinese wages have helped the country gain ground on its chief competitor in trade with the United States. Mexico is now the fourth-largest automaker in the world, the No. 1 producer of flat-screen televisions and a leader in silver mining, he said.
High oil prices have also helped Mexico relative to China, magnifying the geographic advantage. "That makes the geography of Mexico a more privileged place," Carstens said.
Mexico is Minnesota's third-largest export market so far in 2012, behind only Canada and China.
Investors have noticed the country's improving prospects. The yield on 10-year Mexican sovereign bonds is about 5.5 percent, compared with an average of 8.45 percent over the past decade, according to Trading Economics. Since lower yields reflect lower risk, the figures show greater confidence in the country's fundamental soundness.
But Mexico still has work to do. About 40 percent of the consumer price index in Mexico is based on goods and services that are not subject to competition, and Mexican lawmakers must enact stronger antitrust legislation, Carstens said.
Addressing the problem could yield benefits similar to those enjoyed by Mexico after the North American Free Trade Agreement came into force in 1994, which Carstens called a "watershed event" for his country.
Persistent drug violence also is a problem, but Carstens called the crime a "transitory" phenomenon that shouldn't overshadow the nation's economic vibrancy.
"There are many good things going on in Mexico that probably are blurred behind the sensationalism of the violence related to drugs," Carstens said. "Even though the numbers are high, they're isolated events, they're targeted events, and a lot of that even has to do with the fact there is much stronger law enforcement."
Carstens, who crossed paths with Federal Reserve Bank of Minneapolis President Narayana Kocherlakota when both studied at the University of Chicago, met leaders from Cargill, 3M and Best Buy on his visit to the Twin Cities.
He served as minister of finance in the administration of President Felipe Calderon before being appointed head of the central bank in 2010. As Kocherlakota put it in his introduction, in American terms, Carstens "has been both Tim Geithner and Ben Bernanke."
Carstens also lobbied for greater trade openness between the United States and Mexico, noting the potential termination of a 16-year deal that allows tomatoes from Mexico into the U.S. tariff-free.
Florida farmers have lobbied to end the deal, arguing that they can't compete with cheap Mexican tomatoes, but the deal's termination would "not be welcome" in Mexico, Carstens said.
"Different parts of the world are weak and are weakening, like Europe," he said. "It would be welcome to have a stronger North America."
Adam Belz 612-673-4405 Twitter: @adambelz