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Mexico Economic Forecast

Mexico Economic Outlook

Revised data put Q3 GDP growth at 1.1% in quarterly terms, up from the flash estimate and marking the best reading in a year. A 6.8% surge in construction was a key driver, likely linked to progress on the government’s large infrastructure projects and firms relocating production closer to the U.S. Moreover, services activity was healthy, amid lower inflation and strong growth in wages and remittances, while manufacturing should have benefited from resilient U.S. export demand. Turning to Q4, our panelists are projecting somewhat slower quarterly and year-on-year growth, though Mexico should continue to outperform the Latin American average. Looking at available data, while the manufacturing and non-manufacturing PMIs averaged lower in October–November relative to Q3, vehicle output and exports reached multi-year highs in October, supported by continued robust demand from the U.S.

Mexico Inflation

Inflation came in at 4.3% in October, down from September’s 4.5% and broadly in line with market expectations. October’s figure marked the weakest inflation rate since February 2021, but was still above the Central Bank’s 2.0%–4.0% target range. Inflation is seen above-target for most of 2024 on brisk growth in wages and government spending, only returning to target in Q4.

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 -8.6 5.7 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 -9.1 6.7 5.3
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) 593 622 629 602 582
External Debt (% of GDP) 47.2 47.6 56.1 45.9 39.7

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