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Mexico Economic Forecast

Mexico Economic Outlook

Revised data put GDP growth at 0.8% quarter on quarter in Q2, down slightly from the preliminary estimate but still robust compared to growth in the years leading up to the pandemic. Construction boomed 6.5%, which could be linked to progress on the government’s large infrastructure projects and nearshoring activity by private firms. In addition, retail, and cultural and recreation activity grew strongly, underpinned by rising remittances inflows, low unemployment and wage growth comfortably outpacing inflation. Turning to Q3, both the manufacturing and non-manufacturing PMIs pointed to improving economic conditions in July–August. In particular, the manufacturing PMI data suggests that Mexico’s industrial sector is outperforming the global average, boosted by nearshoring, fading supply constraints for car manufacturers and solid export demand from the U.S.

Mexico Inflation

Inflation fell to 4.6% in August from July’s 4.8%, the lowest rate since February 2021. Our panelists expect inflation to average slightly above the upper bound of the Central Bank’s 2.0–4.0% target range in H2 and through most of 2024, fueled by robust economic activity, the recent uptick in global oil prices, brisk wage growth and an expected weakening of the peso.

This chart displays Economic Growth (GDP, annual variation in %) for Mexico from 2013 to 2022.

Mexico Economic Data

2018 2019 2020 2021 2022
Population (million) 125 127 128 129 130
GDP (USD bn) 1,257 1,306 1,120 1,312 1,466
GDP per capita (USD) 10,028 10,318 8,767 10,169 11,270
GDP (MXN bn) 24,177 25,143 24,080 26,609 29,504
Economic Growth (Nominal GDP, ann. var. %) 7.3 4.0 -4.2 10.5 10.9
Economic Growth (GDP, ann. var. %) 2.0 -0.3 -8.7 5.8 3.9
Domestic Demand (ann. var. %) 1.4 -0.4 -11.0 7.3 6.1
Private Consumption (ann. var. %) 1.4 1.1 -10.8 8.2 6.2
Government Consumption (ann. var. %) 3.1 -1.6 -0.7 -0.5 1.3
Fixed Investment (ann. var. %) 0.6 -4.4 -17.3 9.3 8.5
Exports (G&S, ann. var. %) 6.5 1.3 -7.2 7.4 9.1
Imports (G&S, ann. var. %) 5.6 -1.0 -12.3 15.4 8.9
Industrial Production (ann. var. %) 0.2 -1.6 -9.2 6.7 5.0
Retail Sales (ann. var. %) 1.2 2.2 -8.7 13.3 7.2
Unemployment (% of active population, eop) 3.4 2.9 3.8 3.5 2.8
Unemployment (% of active population, aop) 3.3 3.5 4.4 4.1 3.3
Fiscal Balance (% of GDP) -2.0 -1.6 -2.8 -2.8 -3.2
Public Debt (% of GDP) 45.6 45.5 51.7 50.7 48.3
Inflation (CPI, ann. var. %, eop) 4.8 2.8 3.2 7.4 7.8
Inflation (CPI, ann. var. %, aop) 4.9 3.6 3.4 5.7 7.9
Banxico Target Rate (%, eop) 8.25 7.25 4.25 5.50 10.50
TIIE 28 Days Rate (%, eop) 8.60 7.56 4.48 5.72 10.76
10-Year Bond Yield (%, eop) 8.69 6.86 5.47 7.55 9.04
Exchange Rate (MXN per USD, eop) 19.69 18.88 19.93 20.47 19.49
Exchange Rate (MXN per USD, aop) 19.24 19.25 21.49 20.29 20.12
Current Account Balance (USD bn) -26.0 -5.7 22.5 -8.3 -18.0
Current Account Balance (% of GDP) -2.1 -0.4 2.0 -0.6 -1.2
Merchandise Trade Balance (USD bn) -13.6 5.4 34.2 -10.8 -26.9
Merchandise Exports (USD bn) 451 461 417 495 578
Merchandise Imports (USD bn) 464 455 383 506 605
Merchandise Exports (ann. var. %) 10.1 2.2 -9.4 18.6 16.7
Merchandise Imports (ann. var. %) 10.4 -2.0 -15.9 32.0 19.6
Foreign Direct Investment (USD bn) 3.4 3.5 2.8 3.2 3.6
Remittances (USD bn) 33.7 36.4 40.6 51.6 58.5
International Reserves (USD bn) 175 181 196 202 199
International Reserves (months of imports) 4.5 4.8 6.1 4.8 4.0
External Debt (USD bn) 593 622 629 603 589
External Debt (% of GDP) 47.2 47.6 56.1 46.0 40.1

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