Mexico Economic Forecast

Mexico Economic Outlook

August 6, 2019

A preliminary estimate revealed that GDP contracted for the first time since the 2009 economic crisis in Q2, dragged down by a broad-based deterioration across the major sectors. Notably, industrial-sector output fell sharply amid the ailing construction and oil and gas sectors, while the services segment logged only paltry growth. That said, in what came to a surprise to market analysts, the economy managed to avoid slipping into a technical recession as output rebounded, albeit marginally, on a quarterly basis. Meanwhile, in mid-July, the government unveiled a new business plan for the heavily indebted, state-owned oil firm Pemex to revamp production capacity, which includes tax breaks and a capital injection of over USD 7 billion. Nevertheless, the plan was met with skepticism among investors due to concerns over its effectiveness, limited private-sector involvement and impact on fiscal sustainability, which could place the company, and the sovereign, at risk of further credit rating downgrades.

Mexico Economic Growth

Growth is projected to ease sharply this year, mainly due to softer domestic demand. Cuts to government spending, tight monetary conditions, economic policy uncertainty and weakening confidence are set to weigh on both investment activity and private consumption. A reignition of trade tensions with the U.S. and concerns over fiscal discipline cloud the outlook. FocusEconomics panelists expect growth of 1.1% in 2019, which is down 0.2 percentage points from last month’s forecast, and 1.7% in 2020.

Mexico Economy Data

20132014201520162017
Population (million)118120121122124
GDP per capita (USD)10,77310,9649,6548,8049,373
GDP (USD bn)1,2751,3121,1681,0771,158
Economic Growth (GDP, annual variation in %)1.42.83.32.92.1
Domestic Demand (annual variation in %)1.62.52.52.72.9
Consumption (annual variation in %)1.82.12.73.83.2
Investment (annual variation in %)-3.43.15.01.0-1.6
Industrial Production (annual variation in %)-0.22.61.20.4-0.3
Retail Sales (annual variation in %)0.31.15.05.3-0.3
Unemployment Rate4.33.84.03.43.1
Fiscal Balance (% of GDP)-2.3-3.1-3.4-2.5-1.1
Public Debt (% of GDP)37.941.345.449.447.0
Money (annual variation in %)10.711.45.26.88.2
Inflation Rate (CPI, annual variation in %, eop)4.04.12.13.46.8
Inflation Rate (CPI, annual variation in %)3.84.02.72.86.0
Inflation (PPI, annual variation in %)1.30.91.310.35.2
Policy Interest Rate (%)3.503.003.255.757.25
Stock Market (annual variation in %)-2.21.0-0.46.28.1
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)-2.5-1.9-2.6-2.3-1.7
Current Account Balance (USD bn)-31.8-25.1-30.7-24.3-19.6
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)31.032.535.638.337.7

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Mexico Facts

ValueChangeDate
Bond Yield7.51-0.24 %Jul 31
Exchange Rate19.13-0.29 %Jul 31
Stock Market40,8630.12 %Jul 31

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