Mexico Economic Forecast

Mexico Economic Outlook

August 11, 2015

In Q1, the Mexican economy posted the ninth consecutive quarter with sub-3.0% year-on-year growth and recent data suggest that a robust rebound is not in the cards for the near future. In May, economic activity increased at the slowest pace in nine months, dragged down by a contraction in the industrial sector. That said, the weakening of the peso and the recovery of the U.S. economy provided a positive impulse to exports, which increased in June, rebounding from May’s dismal performance. After a year of persistent weakness, the Mexican peso reached uncharted territory in the second half of 2015. The currency broke the 16 MXN per USD barrier in July in reaction to a fall in oil prices, the markets’ view that an increase in U.S. interest rates would take place before year-end and an economy that has failed to meet expectations. Adding to the disappointment, there was insufficient investor interest to attract sufficient bids to warrant contracts in Mexico’s first step toward opening the oil sector.

Mexico Economic Data

20102011201220132014
Population (million)114116117118120
GDP per capita (USD)9,20110,10710,14810,67010,698
GDP (USD bn)1,0521,1691,1881,2631,281
Economic Growth (GDP, annual variation in %)5.14.04.01.42.1
Domestic Demand (annual variation in %)5.14.03.91.51.6
Consumption (annual variation in %)5.74.84.92.22.0
Investment (annual variation in %)1.37.84.8-1.62.3
Industrial Production (annual variation in %)4.63.42.9-0.61.8
Retail Sales (annual variation in %)-0.11.74.11.12.7
Unemployment Rate4.94.54.44.33.8
Fiscal Balance (% of GDP)-2.8-2.4-2.6-2.3-3.2
Public Debt (% of GDP)33.534.935.238.342.4
Money (annual variation in %)12.816.114.59.112.4
Inflation Rate (CPI, annual variation in %, eop)4.43.83.64.04.1
Inflation Rate (CPI, annual variation in %)4.23.44.13.84.0
Inflation (PPI, annual variation in %)4.47.81.21.30.9
Policy Interest Rate (%)4.504.504.503.503.00
Stock Market (annual variation in %)20.0-3.817.9-2.21.0
Exchange Rate (vs USD)12.3613.9512.8713.0414.75
Exchange Rate (vs USD, aop)12.6312.4413.1612.7613.31
Current Account (% of GDP)-0.5-1.1-1.3-2.3-2.1
Current Account Balance (USD bn)-4.9-13.3-15.9-29.7-26.5
Trade Balance (USD billion)-3.0-1.40.0-1.2-2.4
Exports (USD billion)298349371380398
Imports (USD billion)301351371381400
Exports (annual variation in %)29.917.16.12.54.6
Imports (annual variation in %)28.616.45.72.84.9
International Reserves (USD)114143164177193
External Debt (% of GDP)18.417.918.820.221.9

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Mexico Facts

ValueChangeDate
Bond Yield6.100.49 %Aug 25
Exchange Rate17.210.03 %Aug 25
Stock Market42,0111.30 %Aug 25

Mexico Economic Growth

August 11, 2015

Analysts that participated in this month’s Consensus elaborated by LatinFocus cut Mexico’s 2015 growth forecast from the 2.6% expected last month to 2.5%. Although forecasters still expect that growth will be supported by a recovery in the United States and an increase in investments related to the structural reforms, they are becoming more pessimistic regarding the slash in government spending, the disappointing implementation of the structural reforms and the erosion of the currency. Next year, panelists see the economy picking up momentum and expanding 3.2%.

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