Mexico Economic Forecast

Mexico Economic Outlook

January 15, 2019

Available fourth-quarter data points to a moderate cool-off as domestic demand appeared to hobble through year-end. Household spending looks to have been alone at the helm; real wages were on the rise and consumer confidence rode high, both despite elevated inflation. On the other hand, industrial-sector bellwethers have missed the mark in recent months. Along with the deterioration of activity within the pivotal manufacturing sector, these hint at subdued late-year fixed investment. All this follows a solid third-quarter outturn framed by export-driven gains but a slowdown domestically. Andrés Manuel López Obrador’s (AMLO) new government calmed investors’ concerns somewhat on 15 December when it unveiled this year’s budget. Markets responded positively to the restrained spending plans—and its primary fiscal surplus of 1.0% of GDP—and gave the leftist a sorely-needed first win. He initially sent financial markets into a tailspin by scrapping Mexico City’s partially-built airport (NAIM) in late October.

Mexico Economic Growth

FocusEconomics analysts have been decidedly wait-and-see in recent weeks as the new government adjusts to power, forgiving AMLO’s late-2018 missteps as they hold out for new policy-signaling; they see growth at 2.0% this year, down 0.1 percentage points from last month’s forecast. That said, policy uncertainty surrounding the nascent presidency has financial markets on edge, and analysts are notably downbeat on fixed investment over the short-term. More broadly, however, buoyant household spending and a bustling stateside economy are expected to support growth in the coming years. Moreover, once ratified, the United States-Mexico-Canada Agreement should underpin exports over the long-term. Analysts see growth at 2.1% in 2020.

Mexico Economy Data

20132014201520162017
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 %)1.42.83.32.92.0
Domestic Demand (annual variation in %)1.41.92.82.82.9
Consumption (annual variation in %)1.82.13.43.73.0
Investment (annual variation in %)-3.43.15.01.1-1.5
Industrial Production (annual variation in %)-0.22.61.20.4-0.6
Retail Sales (annual variation in %)1.12.75.18.71.3
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)40.042.646.648.746.2
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)-2.4-1.8-2.5-2.2-1.7
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

ValueChangeDate
Bond Yield8.55-0.24 %Jan 30
Exchange Rate19.13-0.29 %Jan 30
Stock Market43,6210.12 %Jan 30

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