Mexico Economic Forecast

Mexico Economic Outlook

September 15, 2020

Although a second estimate revised the plunge in Q2´s GDP upwards, the collapse remained unprecedented, reflecting a contraction across virtually all sectors as the Covid-19 fallout took its toll. A solid month-on-month rebound in industrial production, private consumption and fixed investment in June, however, indicates that activity began to recover at the tail end of Q2 amid the easing of restrictions. Turning to Q3, remittances grew solidly again in July, defying expectations, while consumer confidence continued to creep up through August, boding well for consumer demand. That said, both the manufacturing and services PMIs surprisingly slipped in August, raising concerns over a loss of recovery momentum. Meanwhile, the government revealed a lean draft budget for next year on 8 September, sticking with fiscal discipline over spurring a recovery.

Mexico Economic Growth

The economy is expected to contract at the sharpest pace since the 1995 tequila crisis this year due to pandemic’s blow. A spike in unemployment and underemployment will pummel household spending, while investment activity will remain depressed amid heightened uncertainty. Weak demand from the U.S. and a prolongation of the health crisis pose key risks to the outlook. FocusEconomics panelists project the economy to contract 9.8% in 2020, which is down 0.5 percentage points from last month’s forecast, and grow 3.7% in 2021.

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

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