Mexico Economic Forecast

Mexico Economic Outlook

March 17, 2020

A second GDP release showed that the economy was even weaker than previously estimated in the final quarter of last year, with output contracting more sharply year-on-year on shrinking manufacturing production and a still-reeling construction sector, while confirming the first full-year slump in a decade in 2019. Turning to Q1, available data points to a slight improvement in economic conditions, though downside risks have mounted. Although remaining in contractionary terrain, the manufacturing PMI averaged higher in January–February compared to Q4. The services PMI also fared as such, as did consumer confidence, but January’s tick-up in the unemployment rate and slower job growth might weigh on household spending. In addition, rising price pressures in February, which could be exacerbated further by the plunge in the peso, coupled with the coronavirus fallout, further cloud Q1 prospects.

Mexico Economic Growth

The economy is seen recovering modestly this year, underpinned by gradually strengthening private consumption. That said, the outlook is discouraging amid depressed business confidence; the plunge in global oil prices and its effect on Pemex’s already fragile finances; recent financial market turmoil; and coronavirus-related disruptions to general activity. FocusEconomics panelists estimate growth of 0.6% in 2020, which is down 0.3 percentage points from last month’s forecast, and 1.6% in 2021.

Mexico Economy Data

2014 2015 2016 2017 2018
Population (million)120121122124125
GDP per capita (USD)10,9649,6548,8049,3799,791
GDP (USD bn)1,3121,1681,0771,1591,221
Economic Growth (GDP, annual variation in %)2.83.32.92.12.1
Domestic Demand (annual variation in %)2.53.03.11.82.0
Consumption (annual variation in %)2.12.73.83.22.3
Investment (annual variation in %)3.15.01.0-1.60.9
Industrial Production (annual variation in %)2.61.20.4-0.20.5
Retail Sales (annual variation in %)1.15.05.3-0.31.5
Unemployment Rate3.84.03.43.13.4
Fiscal Balance (% of GDP)-3.1-3.4-2.5-1.1-2.1
Public Debt (% of GDP)41.345.449.446.946.9
Money (annual variation in %)11.45.16.88.34.7
Inflation Rate (CPI, annual variation in %, eop)4.12.13.46.84.8
Inflation Rate (CPI, annual variation in %)4.02.72.86.04.9
Inflation (PPI, annual variation in %)0.91.310.35.26.1
Policy Interest Rate (%)3.003.255.757.258.25
Stock Market (annual variation in %)1.0-0.46.28.1-15.6
Exchange Rate (vs USD)14.7517.1820.7319.6519.65
Exchange Rate (vs USD, aop)13.3115.8818.6918.9119.23
Current Account (% of GDP)-1.9-2.6-2.2-1.7-1.8
Current Account Balance (USD bn)-25.1-30.7-24.0-20.2-22.2
Trade Balance (USD billion)-3.1-14.7-13.1-11.0-13.6
Exports (USD billion)397381374409451
Imports (USD billion)400395387420464
Exports (annual variation in %)4.4-4.1-1.79.510.1
Imports (annual variation in %)4.9-1.2-2.18.610.4
International Reserves (USD)193177177173175
External Debt (% of GDP)32.535.638.337.736.6

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Mexico Facts

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

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