Mexico Economic Forecast

Mexico Economic Outlook

November 9, 2021

The economy contracted in quarter-on-quarter terms in Q3, according to a flash estimate. While the industrial and agricultural sectors recorded robust expansions, the services sector shrank sharply. This was likely due to a surge in Covid-19 cases, as well as the impact of a recent law restricting labor outsourcing by companies. Available indicators for Q4 are more positive, amid an accelerating vaccination campaign and tumbling new Covid-19 infections: Both the manufacturing and non-manufacturing PMIs rose in October, thanks to improved readings for output, new orders and employment. That said, chip shortages could be holding back car production. In politics, the president’s proposed reform to grant more state control over the electricity market has generated pushback from some U.S. politicians, who argue it violates the USMCA trade pact: A watering-down of the plan is possible ahead.

Mexico Economic Growth

In 2022, growth is seen slowing in line with a softer U.S. economy. Moreover, chip shortages could continue to hamper car production through at least the early part of the year. Potential further Covid-19 waves and an uncertain business environment—amid the president’s attempts to increase the state’s role in the energy sector—are key risks to the outlook. FocusEconomics panelists project the economy to expand 3.0% in 2022, which is unchanged from last month’s forecast. In 2023, they see GDP growth waning to 2.3%.

Mexico Economy Data

2015 2016 2017 2018 2019
Population (million)121122124125126
GDP per capita (USD)9,6658,8099,3899,8059,999
GDP (USD bn)1,1691,0771,1601,2231,259
Economic Growth (GDP, annual variation in %)3.32.62.12.2-0.3
Domestic Demand (annual variation in %)3.03.11.82.0-0.9
Consumption (annual variation in %)2.73.83.22.30.6
Investment (annual variation in %)5.01.0-1.60.9-4.9
Industrial Production (annual variation in %)1.10.3-0.30.5-1.7
Retail Sales (annual variation in %)5.05.3-0.31.52.0
Unemployment Rate4.03.43.13.42.9
Fiscal Balance (% of GDP)-3.4-2.5-1.1-2.1-1.6
Public Debt (% of GDP)45.449.446.946.847.1
Money (annual variation in %)5.16.88.34.77.6
Inflation Rate (CPI, annual variation in %, eop)2.13.46.84.82.8
Inflation Rate (CPI, annual variation in %)2.72.86.04.93.6
Inflation (PPI, annual variation in %)1.310.35.26.11.0
Policy Interest Rate (%)3.255.757.258.257.25
Stock Market (annual variation in %)-0.46.28.1-15.64.6
Exchange Rate (vs USD)17.1820.7319.6519.6518.93
Exchange Rate (vs USD, aop)15.8818.6918.9119.2319.25
Current Account (% of GDP)-2.7-2.3-1.8-2.1-0.3
Current Account Balance (USD bn)-31.0-24.3-20.4-25.3-4.3
Trade Balance (USD billion)-14.7-13.1-11.0-13.65.4
Exports (USD billion)381374409451461
Imports (USD billion)395387420464455
Exports (annual variation in %)-4.1-1.79.510.12.2
Imports (annual variation in %)-1.2-2.18.610.4-1.9
International Reserves (USD)177177173175181
External Debt (% of GDP)35.638.337.636.536.8

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

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