Mexico flag Mexico: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Mexico is among the world's 15 largest economies and is the second largest economy in Latin America. The country is highly dependent on the United States, its largest trading partner and destination of nearly 80% of its exports. According to the IMF, GDP grew by an estimated 6.2% in 2021, mainly due to a significant increase in remittances and a gradual job market improvement which positively impacted household consumption. The country is expected to continue growing in the coming years, albeit at a slower pace, with the IMF forecasting a growth of 4% for 2022 and 2.2% for 2023. With increasing vaccination rates and the improvement of the labour market, household consumption is expected to be a key growth driver.

The country recorded a budget deficit of an estimated 3.3% in 2021, a rate that should remain stable in 2022 and 2023, at 3.2% and 3%, respectively. Spending priorities include social programs, the creation of the National Guard to fight rising crime and new funds to support PEMEX, whose rating was downgraded by Fitch due to uncertainty around its future strategy and financial stress. The sector is of pivotal importance to the Mexican economy, as oil production accounts for one third of the government revenues. The country’s debt-to-GDP ratio decreased to 59.8% in 2021 and is expected to remain stable in the upcoming years, at 60.1% in 2022 and 60.5% in 2023. Inflation has been above target since 2017, and it further increased in 2021, reaching 5.4%, the highest rate since 2018. Domestic factors, such as the recovery in the demand for various services, as well as upward pressures on food and energy prices fuelled inflation in 2021. However, inflation is expected to decrease to 3.8% in 2022 and 3% in 2023, boosting purchasing power and private consumption. Overall, Mexico's economic recovery plan in response to the COVID-19 crisis has been efficient, and the country's economy has been gradually rebounding. However, further fiscal support is needed in to ease the strains of the pandemic in the short term.

The labour market is gradually recovering after the initial impact of the pandemic. Mexico's unemployment rate slightly decreased to 4.1% in 2021 and it is expected to reach 3.7% in 2022 and remain stable in 2023. However, the informal sector is still estimated to involve around 60% of employment (OCSE). Key challenges which remain to be tackled include high dependence on the U.S. economy, high and rising criminality rates, income inequality, weakening infrastructure and education, and decades of underinvestment in the oil sector.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 1,269.431,073.92e1,285.521,371.641,446.78
GDP (Constant Prices, Annual % Change) -0.2-8.3e5.32.82.7
GDP per Capita (USD) 10,0298,404e9,96710,54111,025
General Government Balance (in % of GDP) -2.1-2.8e-3.3-3.2-3.0
General Government Gross Debt (in % of GDP) 53.361.0e59.860.160.5
Inflation Rate (%) 3.63.4e5.43.83.0
Unemployment Rate (% of the Labour Force) 3.54.4e4.13.73.7
Current Account (billions USD) -3.9526.12e0.45-3.51-6.42
Current Account (in % of GDP) -0.32.4e0.0-0.3-0.4

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Mexican Peso (MXN) - Average Annual Exchange Rate For 1 GHS 4.684.354.203.713.84

Source: World Bank, 2015

 

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Latest Update: June 2022