Mexico Economic Forecast

Mexico Economic Outlook

April 12, 2022

After flatlining in Q4, the economy appeared to gain steam in Q1, aided chiefly by a stronger automotive industry and the fading impact of last year’s labor outsourcing ban supporting the services sector. However, a surge in Covid-19 cases and ensuing worker absences should have capped momentum early in the period, with higher interest rates and business uncertainty creating additional drags throughout the quarter. Looking at available indicators, economic activity growth ebbed in January but remained solid, while the manufacturing and services PMIs improved in February and March. In addition, remittances continued to expand by double digits through February, which should have supported private consumption. Finally, vehicle production reached the highest level since November 2020 in March, following a prolonged production downturn due to semiconductor shortages.

Mexico Economic Growth

In 2022, growth is seen slowing, in line with ebbing momentum in the U.S. economy. While the Russia-Ukraine war will support prices for Mexico’s oil, it could also dent export demand, disrupt manufacturing supply chains and raise inflation at home. Meanwhile, an uncertain business environment will likely cap investment. FocusEconomics panelists project the economy to expand 2.0% in 2022, which is down 0.4 percentage points from last month’s forecast. In 2023, they see GDP growth waning to 2.2%.

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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Mexico Facts

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

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