Mexico Economic Forecast

Mexico Economic Outlook

May 15, 2018

Economic activity regained its footing in the first quarter following an anemic second half of the year in 2017. An early estimate showed a jump in quarter-on-quarter growth at the outset of the year on broad-based gains across sectors. Separate data suggests that consumption dynamics improved in the quarter, with a fall in the unemployment rate, solid remittance inflows and easing inflationary pressures all pointing to a turnaround in household spending. Although manufacturing output ticked up in March after trailing strong manufacturing-exports data for months, survey data from the manufacturing sector was soft in April. Furthermore, construction activity appears to be getting a boost from pre-election public spending. Meanwhile, a busy political agenda has chilled economic sentiment; left-wing candidate Andrés Manuel López Obrador has been comfortably leading most polls ahead of the 1 July general elections. His likely victory has spooked the business community and weakened the peso, and it could throw a wrench into the final stages of NAFTA renegotiation talks.

Mexico Economic Growth

Ebbing inflationary pressures, tighter domestic and U.S. labor markets and firmer credit growth should support household spending this year. Manufacturing exports are expected to benefit from healthy factory output in the U.S., while a successful rewriting of NAFTA would likely boost fixed investment. FocusEconomics analysts expect growth of 2.2% in 2018, which is unchanged from last month’s estimate. For 2019, analysts see growth accelerating slightly to 2.3%.

Mexico Economy Data

Population (million)118120121122124
GDP per capita (USD)10,66810,8299,5038,551-  
GDP (USD bn)1,2631,2961,1501,046-  
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)-2.3-3.2-3.5-2.6-  
Public Debt (% of GDP)38.341.947.550.2-  
Money (annual variation in %)  
Inflation Rate (CPI, annual variation in %, eop)  
Inflation Rate (CPI, annual variation in %)  
Inflation (PPI, annual variation in %)  
Policy Interest Rate (%)3.503.003.255.75-  
Stock Market (annual variation in %)-2.21.0-0.46.2-  
Exchange Rate (vs USD)13.0414.7517.1820.73-  
Exchange Rate (vs USD, aop)12.7613.3115.8818.69-  
Current Account (% of GDP)-2.5-2.0-2.5-2.1-  
Current Account Balance (USD bn)-31.0-26.2-28.2-22.4-  
Trade Balance (USD billion)-1.2-3.1-14.7-13.1-  
Exports (USD billion)380397381374-  
Imports (USD billion)381400395387-  
Exports (annual variation in %)2.54.4-4.1-1.7-  
Imports (annual variation in %)2.84.9-1.2-2.1-  
International Reserves (USD)177193177177-  
External Debt (% of GDP)20.622.125.930.0-  

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Mexico Facts

Bond Yield7.80-0.24 %May 21
Exchange Rate19.82-0.29 %May 21
Stock Market45,3050.12 %May 21

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