Mexico Economic Forecast

Mexico Economic Outlook

December 3, 2019

A second GDP release revealed that the economy contracted again in Q3, though to a lesser extent than in Q2. Although both agricultural output and services sector activity rebounded, the industrial sector continued to disappoint as the mining and construction industries remained in the doldrums. Notably, the release also included revisions to previous data which indicated the economy entered a mild recession earlier this year. Taken as a whole, however, the data paints more a picture of an economy reeling through complete stagnation so far this year. Turning to the fourth quarter, both the manufacturing and services PMI slid deeper into negative territory in October, boding ill for prospects of a significant bounce-back in overall activity. In other news, in a bid to shore up the economy, the government announced on 26 November the first phase of a MXN 859 billion infrastructure program—financed entirely by the private sector and focusing on transportation projects to be developed through 2024.

Mexico Economic Growth

Next year, growth is projected to pick up modestly on firmer domestic demand, particularly on a rebound in public spending and business investment. Solid household consumption and looser monetary conditions should also support the expansion. Heavily-indebted Pemex, policy uncertainty weighing on confidence and U.S. tariff threats remain key risks to the outlook. FocusEconomics panelists expect growth of 1.2% in 2020, which is down 0.1 percentage points from last month’s forecast, and 1.8% in 2021.

Mexico Economy Data

Population (million)118120121122124
GDP per capita (USD)10,77310,9649,6548,8049,373
GDP (USD bn)1,2751,3121,1681,0771,158
Economic Growth (GDP, annual variation in %)
Domestic Demand (annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)-
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)
Unemployment Rate4.
Fiscal Balance (% of GDP)-2.3-3.1-3.4-2.5-1.1
Public Debt (% of GDP)37.941.345.449.447.0
Money (annual variation in %)10.711.
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)3.503.003.255.757.25
Stock Market (annual variation in %)-2.21.0-
Exchange Rate (vs USD)13.0414.7517.1820.7319.65
Exchange Rate (vs USD, aop)12.7613.3115.8818.6918.91
Current Account (% of GDP)-2.5-1.9-2.6-2.3-1.7
Current Account Balance (USD bn)-31.8-25.1-30.7-24.3-19.6
Trade Balance (USD billion)-1.2-3.1-14.7-13.1-11.0
Exports (USD billion)380397381374409
Imports (USD billion)381400395387420
Exports (annual variation in %)2.54.4-4.1-1.79.5
Imports (annual variation in %)2.84.9-1.2-2.18.6
International Reserves (USD)177193177177173
External Debt (% of GDP)31.032.535.638.337.7

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Mexico Facts

Bond Yield6.87-0.24 %Dec 31
Exchange Rate18.93-0.29 %Jan 01

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