Mexico Economic Outlook
Continental powerhouse:
Mexico is the second-largest economy in Latin America and the fourth-largest in the Americas, with a nominal GDP of over USD 1.5 trillion. Mexico is also the third most populous country in the Americas, after the U.S. and Brazil.
Manufacturing hub:Manufacturing plays a major role in Mexico's economy, particularly in the automotive, electronics, and consumer goods sectors. The country has become a major base for companies looking to export to the United States and Canada, with Mexico benefiting from competitive labor costs and the USMCA free trade agreement with its two North American neighbors. In recent years, Mexico's manufacturing sector has gotten a boost from the pandemic, U.S.-China trade tensions, and U.S. financial incentives to produce key industrial goods in North America. All three factors are spurring nearshoring demand in Mexico, which in early 2023 became the U.S.' top trading partner ahead of Canada and China.
Energy and Natural Resources:Mexico is rich in natural resources, including petroleum, silver, copper, gold, lead, zinc and natural gas. The oil sector, dominated by state-owned company Pemex, is crucial for government revenues, although production has been declining in recent years. Under President López Obrador, the government has attempted to limit the private sector's involvement in the energy sector, stifling private investment.
Challenges:Mexico faces several economic challenges, including gaping income inequality, underemployment, a large informal sector and shaky infrastructure. The country also contends with issues related to drug-related violence and corruption, which have an impact on its investment climate. In addition, in recent years, the MORENA-led administration has adopted an ambivalent attitude towards private business, particularly in the energy and natural resources sector of the economy. Donald Trump’s second term as U.S. president is an extra source of uncertainty: Trump has threatened higher tariffs on Mexico, which could cripple Mexico’s economy; 80% of Mexican exports are to the U.S.
Mexico's economic outlook:Mexico's economy outperformed the Latin America average from 2022 to 2024, and is likely to continue to do so in the short to medium term due to uncertainty over U.S. trade policy plus a tighter fiscal stance in the wake of the 2024 general elections.
Mexico's Macroeconomic Analysis:
Nominal GDP of USD 1,851 billion in 2024.
Nominal GDP of USD 1,795 billion in 2023.
GDP per capita of USD 13,688 compared to the global average of USD 10,589.
GDP per capita of USD 13,996 compared to the global average of USD 10,589.
Average real GDP growth of 1.5% over the last decade.
Average real GDP growth of 1.5% over the last decade.
Sector Analysis
In 2022, services accounted for 58% of overall GDP, manufacturing 20%, other industrial activity 18%, and agriculture 4%. Looking at GDP by expenditure, private consumption accounted for 70% of GDP in 2023, government consumption 11%, fixed investment 25%, and net exports -6%.International trade
In 2023, manufactured products made up 78% of total merchandise exports, mineral fuels 5%, food 8%, ores and metals 2% and agricultural raw materials 0%, with other categories accounting for 7% of the total. In the same period, manufactured products made up 75% of total merchandise imports, mineral fuels 7%, food 6%, ores and metals 2% and agricultural raw materials 1%, with other goods accounting for 9% of the total. Total exports were worth USD 617 billion in 2024, while total imports were USD 625 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 1.5% in the decade to 2024. The economy benefited from its proximity to the United States but faced headwinds from fluctuating oil prices and an ambivalent stance towards the private sector under President Obrador. Post-pandemic the economy has benefitted from a recovery in tourism, strong remittances and exports, and state investment in large infrastructure projects such as the Maya Train and a new airport. To read more about GDP growth in Mexico, go to our dedicated page.
Fiscal policy
Mexico's fiscal deficit averaged 2.5% of GDP in the decade to 2023. This reflected cautious fiscal policy under President López Obrador. However, the deficit widened markedly in 2023 due to pre-election spending. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 3.7% in the decade to 2024. The unemployment has generally been on a downward trend, and reached the lowest rate since the early 2000s at the end of 2023. For more information on Mexico's unemployment click here.
Inflation
Inflation averaged 4.7% in the decade to 2024. The country faced several economic challenges, including currency fluctuations, changes in fiscal policies, and external economic shocks. The COVID-19 pandemic temporarily increased inflation, but the Bank of Mexico's monetary policy tightening helped stabilize it towards the end of 2022. Go to our Mexico inflation page for extra insight.
Monetary Policy
Mexico's monetary policy rate ended 2024 at 10.00%, up from 3.00% a decade earlier. Initially, rates were increased to control inflation, but were cut to stimulate growth during economic slowdowns, particularly during the COVID-19 pandemic. Post-pandemic, the focus shifted to controlling rising inflation, leading to increased rates. See our Mexico monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the peso weakened by 29.3% vs the U.S. dollar.However, the currency strengthened post-pandemic, thanks to Banxico's double-digit policy rate, and strong inflows of tourists, remittances and export revenue. For more info on the peso, click here.
Economic situation in Mexico
After shrinking by 0.6% quarter on quarter in Q4, our panelists expect the economy to have shrank again in Q1. The threat of U.S. tariffs, followed by their eventual implementation in March, likely had a chilling impact on investment and exports in the first quarter. Moreover, fiscal consolidation in the wake of 2024’s election-related spending boost dragged on government spending. However, private consumption should have backstopped economic activity, amid lower inflation and interest rates plus a sizable minimum wage hike in January. Available data is downbeat, with economic output shrinking month on month in January even before the tariffs came into effect. From early April, the U.S. introduced a 25% tariff on vehicle imports. The move could hit Mexico hard, given that cars are the country’s top export.Mexico Economic Forecasts
Projections out to 2034.58 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 52 expert analysts.
Want to get insight on the economic outlook for Mexico in the coming years? FocusEconomics collects projections out to 2034 on 58 economic indicators for Mexico from a panel of 52 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Mexico economy. To download a sample report on the Mexico's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
Mexico Economic Indicators
Q&A:
How is the economy in Mexico currently?
Is Mexico's economy bigger than Spain's?
What is Mexico's main economic sector?
What is the outlook for the Mexican economy?
Mexico's economy is currently strengthening following a Covid-19-induced slowdown. GDP growth is supported by a rebound in domestic demand, a recovery in the services sector, and continued manufacturing sector growth. However, the economy still faces challenges such as income inequality and ongoing insecurity.
Mexico's economy, measured by nominal GDP, is larger than Spain's, though not by much. Moreover, given Mexico's far higher population—around 130 million compared to 48 million for Spain—Spain has a far higher GDP per capita.
The services sector is the largest in Mexico and contributes to over half of the country's GDP.
The Mexican economy is expected to grow ahead, fueled by strong domestic demand amid nearshoring investment. However, challenges like poor infrastructure, income inequality, and security issues will persist.