Mexico Economic Forecast

Mexico Economic Outlook

December 4, 2018

Comprehensive data confirmed that growth bounced back in the third quarter on across-the-board expansions. This was particularly marked within the services sector as consumers sprang to life following the landslide victory of Andrés Manuel López Obrador (AMLO) in the 1 July general election. The interregnum in the lead-up to his inauguration on 1 December was marred by controversy, however, and financial turmoil in recent weeks suggests that markets had not entirely priced in his policy prescriptions. Policy uncertainty abounds; his cancellation of the USD 13 billion New Mexico City International Airport (NAIM) in October via disputed referendum spooked investors and sparked a selloff of the peso—putting Banxico in the hotseat. Analysts have grown bearish in the first days of AMLO’s ascendency to the top post: Anticipated pass-through is likely to sting consumers over the short-term, while higher interest rates and the shock to business sentiment bode poorly for investment.

Mexico Economic Growth

Short-term growth prospects were bruised in recent weeks by the policy uncertainty surrounding AMLO’s nascent presidency. In particular, analysts have slashed their investment projections due to firms’ anxieties over the new administration. FocusEconomics analysts now see growth at 2.1%, down 0.1 percentage points from last month’s forecast. More broadly, however, tight labor markets both domestically and stateside are expected to support growth in the coming years. On the external front, the newly-minted United States-Mexico-Canada Agreement (USMCA) should support exports over the long-term. Analysts see growth at 2.2% in 2020.

Mexico Economy Data

Population (million)118120121122124
GDP per capita (USD)10,77310,9649,6548,8049,325
GDP (USD bn)1,2751,3121,1681,0761,152
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)40.042.646.648.746.2
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)-2.4-1.8-2.5-2.2-1.7
Current Account Balance (USD bn)-31.0-24.0-29.8-23.3-19.4
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)31.132.635.838.538.0

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Mexico Facts

Bond Yield9.14-0.24 %Dec 10
Exchange Rate20.31-0.29 %Dec 10
Stock Market41,3560.12 %Dec 10

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