Mexico Economic Forecast

Mexico Economic Outlook

September 14, 2021

The economy gained steam in Q2 according to a comprehensive release. The services sector underpinned the reading, aided by surging remittances, healthier consumer confidence and lower domestic Covid-19 cases, although the industrial sector was likely held back by supply issues. Turning to Q3, the economy appears to be losing some steam amid surging Covid-19 cases. Through August, both the manufacturing and non-manufacturing PMIs pulled back, while consumer confidence fell. However, the authorities’ fairly moderate approach regarding new restrictions should be limiting the fallout, while remittances continued to soar in July on an improving U.S. labor market, which should be supporting domestic consumption. In other news, in September the government presented the 2022 budget, which marks a slight loosening of austerity.

Mexico Economic Growth

Activity is set to pick up in 2021 as rapid growth in the U.S. aids remittances and exports. However, a fairly tight fiscal stance and the still-raging pandemic at home will keep a lid on domestic demand. A still-sluggish vaccine rollout and an uncertain business environment—amid the president’s attempts to increase the state’s role in the energy sector—cloud the outlook. FocusEconomics panelists project the economy to expand 5.9% in 2021, which is up 0.1 percentage points from last month’s forecast. In 2022, they see GDP growth waning to 3.0%.

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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