Mexico Economic Forecast

Mexico Economic Outlook

June 14, 2022

Revised figures show that the economy expanded 1.0% quarter on quarter in Q1, marginally faster than previously estimated. The reading was driven by a sharp rebound in services activity, likely as the impact of last year’s labor outsourcing ban faded. Industrial output also picked up pace amid increased vehicle production and strong U.S. import demand, while the agricultural sector shrank. In Q2, available data suggests a continued—albeit milder—expansion, as higher inflation and interest rates weigh on activity. Experimental data from the statistics office pointed to a slowdown in economic growth in April due to softer services momentum. Moreover, both the manufacturing and services PMIs declined somewhat in May. However, strong employment and wage growth in the U.S. continues to spur remittances inflows, which should be buttressing consumption.

Mexico Economic Growth

In 2022, growth is seen moderating sharply because of higher inflation and interest rates, limp investment due to weak business sentiment, and a much weaker expansion in the U.S.—Mexico’s largest trading partner by far. More positively, higher oil prices will aid government coffers. Disruptions to manufacturing supply chains and a potential hard economic landing in the U.S. are risks. FocusEconomics panelists project the economy to expand 1.9% in 2022, which is down 0.1 percentage points from last month’s forecast. In 2023, they see GDP growth of 2.1%.

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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Exchange Rate18.93-0.29 %Jan 01

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