Mexico Economic Forecast

Mexico Economic Outlook

October 13, 2020

Incoming data alludes to a gradual recovery in Q3, mainly propelled by the external sector, following the unparalleled GDP collapse in Q2 on the Covid-19 fallout. Trade data for July–August indicates that manufacturing exports recouped most of the losses suffered during the worst of the crisis in Q2. However, heavy declines in imports and a still-elevated unemployment rate during the same period point to a slower recovery in domestic demand. Encouragingly, the services PMI bounced back from August’s dip in September, hinting that the sector might be gaining some traction. Meanwhile, on 5 October, the government unveiled a mostly privately financed MXN 297 billion (about USD 13.8 billion) infrastructure plan to revive the ailing economy. The next day, on completion of its annual visit, the IMF encouraged authorities to enact larger near-term fiscal and monetary support to aid the recovery.

Mexico Economic Growth

This year, the economy is seen contracting massively as the pandemic takes its toll. Heavy losses in employment and incomes, coupled with elevated uncertainty, will pummel domestic demand. The economy should recover next year, however, as activity gradually revives. A prolongation of the health crisis and the timid fiscal response represent key risks to the outlook. FocusEconomics panelists project the economy to contract 9.9% in 2020. In 2021, the economy is seen rebounding and growing 3.7%, which is unchanged from last month’s forecast.

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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