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Economic and political overview

Economic Overview

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 main trading partner and destination of nearly 80% of its exports. Over the past three decades, Mexico's growth, inclusion, and poverty reduction have lagged behind similar countries. From 1980 to 2022, the economy grew at an average rate of just over 2% annually, hindering progress in narrowing the gap with high-income economies. However, in 2023, the economy grew by 3.2%, while in 2024 growth slowed to 1.5% due to binding capacity constraints and restrictive monetary policy, reflecting a moderation after the post-pandemic rebound. Growth is expected to slow further in 2025 (to 1.4%) due to the withdrawal of fiscal stimulus and a slowdown in the U.S. Over the medium term, growth is projected to converge to a potential rate of around 2% (IMF).

The fiscal position was highly procyclical in 2024. Under the authorities’ plans, the overall deficit was expected to increase to 5.9% of GDP, representing a fiscal impulse of 2.2% of GDP. While revenues slightly exceeded expectations, mainly due to higher oil prices, spending on pensions and major infrastructure projects was also higher. Additional support for Pemex or unexpected infrastructure expenditures towards the end of the year brought the deficit to around 6.2%. With gross public sector debt estimated at 57.7% of GDP by the end of 2024, Mexico still has some fiscal space to address temporary shocks. As per the government budget, a deficit of 3.2% of GDP is estimated for 2025, along with a primary budget surplus of 0.6% of GDP, whereas the debt-to-GDP ratio should remain stable. The inflation rate decelerated to 4.2% in December 2024, the lowest rate since February 2021. It is expected to return to the 3% target by the end of 2025; however, risks to inflation remain on the upside, mainly from more persistent services inflation, higher commodity prices, or weather-related shocks (IMF).

As of December 2024, Mexico's unemployment rate dropped to 2.4% of the economically active population. Informal workers totalled 31.8 million, with an informality rate of 53.7%. The data from INEGI reveals a persistent gender gap, as the female labour force participation rate fell by 0.3 percentage points to 46% of the working-age population, while the male rate dropped by 0.6%. Mexico's official multidimensional poverty rate, which includes income poverty and six indicators of social deprivation, decreased from 43.2% in 2016 to 36.3% in 2022, lifting 5.4 million people out of poverty. The World Bank projects that poverty will continue to decline slowly through 2026. Finally, the country’s GDP per capita (PPP) was estimated at USD 24,971 in 2024 by the IMF.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 1,788.821,848.131,817.821,905.281,994.12
GDP (Constant Prices, Annual % Change) 3.21.51.42.02.3
GDP per Capita (USD) 13,64113,97213,63014,17514,729
General Government Balance (in % of GDP) -4.5-6.2-3.6-2.7-2.7
General Government Gross Debt (in % of GDP) 53.157.757.957.857.9
Inflation Rate (%) 5.54.73.83.03.0
Unemployment Rate (% of the Labour Force) 2.83.03.33.43.5
Current Account (billions USD) -5.48-13.70-15.50-19.48-20.32
Current Account (in % of GDP) -0.3-0.7-0.9-1.0-1.0

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Mexico's economy is diversified, including hi-tech industries, oil production, mineral exploitation, and manufacturing. According to the latest data from the World Bank, agriculture accounts for 3.8% of Mexico’s GDP and employs 12% of the country’s active population. The country is the world's seventh agricultural power and ranks among the world's largest producers of coffee, sugar, corn, oranges, avocados and limes. Cattle farming and fishing are also important activities in the food industry. Moreover, Mexico is the world's fourth-largest producer of beer and its largest exporter. In 2024, total agricultural production saw a general decline of 2.1% compared to 2023—a loss of 5.99 million tons, according to the Grupo de Consultores de Mercados Agrícolas (GCMA). In the same year, agricultural and livestock exports reached USD 23.3 billion (+7.1% y-o-y – data INEGI).

The industrial sector employs one-fifth of the Mexican workforce and represents 31.6% of GDP, according to the World Bank. Mexico is among the world's leading producers of many minerals, including silver, fluorite, zinc and mercury. Moreover, oil and gas reserves are one of the country’s most precious possessions. The aerospace sector has grown sharply, thanks to the development of a cluster in Queretaro and the presence of nearly 190 companies, including Bombardier, Goodrich, the Safran group and Honeywell, which together employ 30,000 people. Mexico is also one of the world's ten largest car producers and due to significant real estate investments, the construction sector is dynamic. The manufacturing sector alone is estimated to account for 20% of GDP. Mexico's industrial production grew by 0.2% in 2024, despite a 4.3% drop in mining, according to INEGI. Growth was driven by construction (+2.7%), energy and utilities (+1.6%), and manufacturing (+0.3%).

The service sector constitutes 58.6% of GDP and employs 63% of the workforce. Although the services sector was hit the hardest during the pandemic, it showed a significant recovery in the past couple of years. The hi-tech, information, and software development sectors are experiencing real momentum, driven by the quality of the workforce, clusters and low operating costs that favour the creation of call centres. Medical services and tourism have been growing steadily for the past few years, mainly due to lower service costs than in Western countries. Tourism is a vital sector for the Mexican economy: over 40 million tourists visited Mexico in the first 11 months of 2024. However, the real record-breaker was foreign visitor spending, which reached USD 26.8 billion from January to November, marking a 5.67% increase from the same period in 2023 (data INEGI).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 12.0 25.0 63.0
Value Added (in % of GDP) 3.8 31.6 58.6
Value Added (Annual % Change) -1.5 3.5 3.2

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Mexican Peso (MXN) - Average Annual Exchange Rate For 1 USD 18.6618.9319.2419.3021.49

Source: World Bank - Latest available data.

 

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Foreign Trade

Mexico is highly open to foreign trade, which represented 73% of its GDP in 2023 (World Bank, latest available data). The country mainly exports motor cars and other motor vehicles (9.7%), parts and accessories for motor vehicles (6.8%), motor vehicles for the transport of goods (6.4%), automatic data-processing machines (5.0%), and petroleum oils (4.7%); whereas imports are led by parts and accessories for motor vehicles (5.4%), petroleum oils (5.1%), electronic integrated circuits (4.0%), telephone sets (3.5%), and motor vehicles (3.0% - data Comtrade).

Mexico is heavily dependent on commercial relations with its main trading partner – the United States – which accounts for more than three-quarters of the country’s exports (79.6% in 2023). Other destinations for Mexican exports include Canada (3.0%), China (1.5%), Germany (1.5%), Brazil (0.7%), and Japan (0.6%). As per imports, the main origins include the United States (42.8%), China (19.1%), Germany (3.5%), Japan (3.4%), and South Korea (3.3% - data Comtrade). Mexico has signed a dozen free-trade agreements with about forty different countries of the world. Other trade advantages of Mexico include the United States–Mexico–Canada Agreement (which replaced NAFTA in 2020), its free-trade agreement with the European Union since 2000, a trade agreement with Japan since 2005 and the 2012 foundation of the Pacific Alliance along with Colombia, Chile and Peru. Mexican and U.S. industries are deeply integrated through duty-free trade under USMCA, with an effective U.S. tariff rate of just 0.3%. However, the Trump administration’s proposed 25% tariff on all Mexican imports poses a major risk, potentially triggering a Mexican recession in 2025 and cutting output by 3.0pp by 2026 (Fitch Ratings). The full impact remains uncertain due to complex supply chains and possible secondary effects.

The country's trade balance is structurally negative. In 2023, exports of goods reached USD 593 billion against USD 621.4 billion in imports (+2.6% and -0.7%, respectively). Concerning services, exports stood at USD 52.1 billion (+8.5%, thanks to the positive performance of the tourism sector), whereas imports totalled USD 69.5 billion (+9.8% y-o-y). The World Bank estimated the country’s trade deficit at 1.2% of GDP for the year. According to preliminary data from INEGI, in 2024, the trade balance showed a deficit of USD 8.21 billion, compared to a deficit of USD 5.47 billion in 2023. The increase in the deficit between 2023 and 2024 was due to a reduced surplus in non-petroleum products—falling from USD 13.09 billion in 2023 to USD 1.83 billion in 2024—and a smaller deficit in petroleum products, which decreased from USD 18.56 billion in 2023 to USD 10.04 billion in 2024. Exports and imports totalled USD 617.1 billion and USD 625.3 billion, respectively.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 467,118393,278522,455626,324621,476
Exports of Goods (million USD) 460,604417,171494,949577,735593,012
Imports of Services (million USD) 39,61941,72452,96563,28969,545
Exports of Services (million USD) 31,71726,25237,94548,07552,158

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 77.576.983.188.473.2
Trade Balance (million USD) 5,16834,151-10,730-27,116-5,549
Trade Balance (Including Service) (million USD) -4,26621,712-23,128-42,568-24,966
Imports of Goods and Services (Annual % Change) -1.1-12.015.77.65.0
Exports of Goods and Services (Annual % Change) 1.2-7.07.18.9-7.4
Imports of Goods and Services (in % of GDP) 38.937.642.545.737.2
Exports of Goods and Services (in % of GDP) 38.539.240.642.736.0

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) -0.53.32.53.53.5
Volume of imports of goods and services (Annual % change) 1.12.43.23.33.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Mexico is a member of the following international economic organisations: IMF, North American Free Trade Agreement (NAFTA), OECD, Asia-Pacific Economic Cooperation (APEC), ICC, G-3, G-15, G-20, G-24, WTO, among others. For the full list of economic and other international organisations in which participates Mexico click here. International organisation membership of Mexico is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Mexico can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
United States 79.6%
Canada 3.0%
China 1.5%
Germany 1.5%
Brazil 0.7%
See More Countries 13.6%
Main Suppliers
(% of Imports)		 2023
United States 42.8%
China 19.1%
Germany 3.5%
Japan 3.4%
South Korea 3.3%
See More Countries 27.9%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President and head of government: Claudia Sheinbaum Pardo (since 1st October 2024)
Next Election Dates

Presidential: 2030
Chamber of Deputies: 2027
Senate: 2030
Current Political Context
General elections were held in Mexico on 2 June 2024. Voters elected a new president to serve a six-year term, all 500 members of the Chamber of Deputies, and all 128 members of the Senate of the Republic. Claudia Sheinbaum, a member of the left-wing political party Morena, was widely regarded by her party as the top contender to succeed President Andrés Manuel López Obrador and ultimately secured the nomination of the ruling coalition, Sigamos Haciendo Historia. Xóchitl Gálvez emerged as the frontrunner of Fuerza y Corazón por México following a surge in popularity due to criticisms from López Obrador. Citizens' Movement, the only national party without a coalition, nominated Jorge Máynez. Sheinbaum won the presidential election by a landslide margin of over 33 points, becoming the first woman to be elected president of Mexico. In the legislative elections, the Sigamos Haciendo Historia coalition won a supermajority in the Chamber of Deputies. The coalition fell three seats short of a supermajority in the Senate, but defections by the two senators elected for the PRD on 28 August closed the shortfall to one.
Concerning foreign affairs, throughout the year, U.S.-Mexico relations showed signs of tension, especially after the election of Donald Trump who has traditionally had a strict stance towards the bordering country concerning border security, immigration, trade, tariffs and drug trafficking. In January 2025, Mexico refused a U.S. request to allow a military aircraft deporting migrants to land in the country, days after Trump came into office.
Main Political Parties
Mexico has a multi-party system. Under the transition to democratic pluralism, the centre of political power has shifted away from the executive and towards the legislative branch and local governments. The largest political parties in the country are:

- National Regeneration Movement (MORENA): centre-left to left wing, anti-neoliberalism, left-wing nationalism, populism. As of 2025, it is the largest political party in Mexico's parliament.
- National Action Party (PAN): centre-right to right wing, liberal conservative, Christian democratic party. It is the main opposition party
- Ecologist Green Party of Mexico (PVEM): centre-right, environmentalist, conservative.
- Labour Party (PT): left-wing, social democratic, labourist, left-wing nationalist.
- Institutional Revolutionary Party (PRI): centre to centre-left, oldest political party in the country, constitutionalist, technocratic, social conservative, big tent party.
- Citizens' Movement (MC): centre-left, social democratic, progressist.

Executive Power
In Mexico, as established by the Constitution, the Executive power is vested in the President of the United Mexican States, who serves as both Head of State and Head of Government, as well as the Supreme Commander of the Armed Forces. The President is elected by popular vote for a single six-year term, known as a sexenio, and reelection is prohibited. As the head of the executive branch, the President has the authority to appoint the Cabinet, although certain key appointments, such as the Attorney General and diplomatic positions, require Senate approval.
Legislative Power
The legislative power in Mexico is vested in the Congress of the Union, which is bicameral, consisting of the Chamber of Deputies and the Senate of the Republic. The Chamber of Deputies is composed of 500 members, 300 elected through plurality voting in single-member districts and 200 through proportional representation in multi-member districts, all serving three-year terms. The Senate of the Republic comprises 128 members, with 96 elected through plurality voting—two for each state and Mexico City, plus one for the first minority—and 32 through proportional representation, all serving six-year terms.
 

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