Mexico Economic Forecast

Mexico Economic Outlook

November 10, 2020

Preliminary data revealed that GDP contracted at a softer annual pace in Q3 than in Q2 as activity gradually recovered from the Covid-19 blow. On a quarterly basis, the economy rebounded vigorously, growing at the sharpest rate on record. The results underlined an uneven recovery in the making: Firmer foreign demand largely buoyed the industrial sector via a solid recovery in exports, particularly those tied to manufacturing. Meanwhile, the key services sector, which accounts for about two thirds of the economy, lagged behind as some form of restrictions prevailed in most of the country and still-elevated unemployment and weak sentiment weighed on domestic demand. Looking ahead, this pattern seems to have continued into Q4: In October, the manufacturing PMI jumped to growth territory, albeit just barely, for the first time in 17 months, whereas the services PMI retreated further into contractionary terrain.

Mexico Economic Growth

Economic activity will plummet this year due to the coronavirus fallout, before bouncing back to growth in 2021 as demand revives. That said, significant risks remain, including subdued sentiment constraining household and capital spending, uncertainty surrounding the course of the pandemic, and the lack of significant fiscal relief measures hindering the recovery. FocusEconomics panelists project the economy to expand 3.7% in 2021, which is unchanged from last month’s forecast. In 2022, they see GDP growth waning to 2.5%.

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

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