Mexico Economic Forecast

Mexico Economic Outlook

July 14, 2020

The recession will have deepened in the second quarter under the full weight of Covid-19 containment measures, after GDP fell at the steepest rate in over a decade in the first quarter. Economic activity slumped at a record pace in April as all major sectors reeled, with the key industrial segment especially battered amid the shutdown of activity. In the same month, fixed investment suffered the largest annual collapse since 1995 as equipment spending and the construction industry languished. Similarly, private consumption plummeted, which, combined with plunging goods imports in May and heavy formal job losses through June, alludes to depressed domestic demand in Q2. Meanwhile, although the country is undergoing a phased reopening, the pandemic’s toll continues to mount at an alarming pace. In other news, on 8 July, President López Obrador met with his U.S. counterpart for the first time in Washington DC to celebrate the start of the USMCA trade deal, which came into force on 1 July.

Mexico Economic Growth

The economy is poised to shrink markedly this year as the pandemic ravages domestic and foreign demand. A battered labor market and voluntary social distancing will pummel consumer spending, while weak confidence and elevated uncertainty will undermine investment. A bleak U.S. demand backdrop, foreign travel restrictions and subdued oil prices will also batter exports. FocusEconomics panelists project the economy to contract 8.5% in 2020, which is down 1.0 percentage point from last month’s forecast, and grow 3.3% in 2021.

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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Value Change Date
Bond Yield6.87-0.24 %Dec 31
Exchange Rate18.93-0.29 %Jan 01

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