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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. According to the IMF, GDP grew by an estimated 3.2% in 2023, driven by a robust services sector (particularly in retail), a resilient job market, inflows of remittances from expatriates in the U.S., and an increasing wage bill. The IMF outlook anticipates a 2.1% expansion this year and a 1.5% growth in 2025. Private consumption is expected to play a pivotal role, buoyed by low unemployment and rising real wages. Private investment is poised to see gradual improvement due to the shift of manufacturing activity to Mexico. Although exports may be hampered by slower growth in major trading partners, the economy stands to gain from its deep integration in manufacturing value chains and the trend of nearshoring.

In 2023, the Mexican government maintained a prudent fiscal policy, with the budget deficit remaining unchanged from the previous year, at 4.2% of GDP, despite heightened interest payments, augmented allocations for priority programs, and a decrease in revenue from oil taxes. The IMF expects the deficit to increase to 5.8% in 2024, attributed to heightened budget allocations for social expenditures, notably in universal non-contributory pensions, and substantial investments in key infrastructure projects in the southern region. The wider deficit should contribute to an increase in general government debt to GDP to 54.7% in 2024 from 52.7% last year, also due to high real interest rates and a procyclical policy stance. Headline inflation has continued to decline throughout 2023, averaging 5.5%, albeit with particularly high pressures in services. Both annual headline and core inflation are projected to gradually decrease and are anticipated to reach the 3% target by the end of 2025.

The labour market has been recovering since the pandemic. In 2023, Mexico's unemployment rate declined to 2.9% but it is expected to increase to 3.1% this year and to 3.4% in 2025 (IMF). To date, 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 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 1,465.851,811.471,994.152,081.182,171.30
GDP (Constant Prices, Annual % Change) 3.93.22.11.51.8
GDP per Capita (USD) 11,26613,80415,07215,60716,160
General Government Balance (in % of GDP) -4.2-4.2-5.8-2.8-2.8
General Government Gross Debt (in % of GDP) 54.152.754.755.155.5
Inflation Rate (%) n/a5.53.83.13.0
Unemployment Rate (% of the Labour Force) 3.32.93.13.43.6
Current Account (billions USD) -18.05-26.62-28.54-23.57-18.89
Current Account (in % of GDP) -1.2-1.5-1.4-1.1-0.9

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 4% of Mexico’s GDP and employs 12% of the country’s active population. Mexico 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. Mexico is also the world's fourth-largest producer of beer and its largest exporter. The agricultural sector suffers from occasional droughts (2023 being the dryest year since 1957) and other issues related to climate.

The industry employs 26% of the Mexican workforce and represents 33.6% 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 21% of GDP. According to official figures, industrial production grew by 3.9% year-on-year in the first ten months of 2023.

The service sector constitutes 57.6% of GDP and employs 62% of the workforce. The hi-tech, information, and software development sectors are experiencing a 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 other Western countries. Although the services sector was hit the hardest during the pandemic, it showed a significant recovery in the past couple of years. Tourism is a vital sector for the Mexican economy, with the number of foreign visitors increasing by 11% up to October 2023 in comparison to the preceding year (data INEGI). In 2022 as a whole, the tourist GDP reported a total of MXN 2,372,556 million, equivalent to 8.5% of the national GDP.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 12.3 25.6 62.0
Value Added (in % of GDP) 4.1 32.1 58.8
Value Added (Annual % Change) 2.8 3.3 2.8

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 88% of its GDP in 2022 (World Bank, latest available data). The country mainly exports cars (8.1%), automatic data-processing machines (7.4%), vehicle parts (6.6%), vehicles for the transport of goods (5.7%), and petroleum oils (5.5%). As for imports, Mexico’s main purchases include petroleum oils (6.9%), parts and accessories for motor vehicles (4.9%), electronic integrated circuits (4.4%), petroleum gas (2.9%), and telephone sets (2.7% - 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 (78.1% in 2022). Other destinations for Mexican exports include Canada (2.7%), China (1.9%), Germany (1.4%), Brazil and Japan (0.9% each). As per imports, the main origins include the U.S. (43.8%), China (19.6%), South Korea (3.7%), Germany (3.1%), and Japan (3% - data INEGI). 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.

The country's trade balance is structurally negative. In 2022, exports of goods reached USD 578.1 billion against USD 626.3 billion in imports (-7.6% and +19.8%, respectively). Concerning services, exports stood at USD 36 billion (+32.7%, mostly due to the positive performance of the tourism sector), whereas imports totalled USD 46.8 billion (+20.8% y-o-y). According to preliminary data from INEGI, merchandise exports stood at USD 577.7 billion in 2023, against USD 604.6 billion in imports.

 
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 20182019202020212022
Foreign Trade (in % of GDP) 80.677.976.983.989.5
Trade Balance (million USD) -13,7685,16834,151-10,730-27,078
Trade Balance (Including Service) (million USD) -26,654-5,12918,679-25,750-42,292
Imports of Goods and Services (Annual % Change) 6.4-0.7-13.715.68.9
Exports of Goods and Services (Annual % Change) 6.01.5-7.37.17.5
Imports of Goods and Services (in % of GDP) 41.339.137.442.846.1
Exports of Goods and Services (in % of GDP) 39.338.839.541.143.4

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) -2.62.92.23.03.1
Volume of imports of goods and services (Annual % change) 6.51.01.42.73.0

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)
2022
United States 78.3%
Canada 2.7%
China 1.9%
Germany 1.4%
Japan 0.8%
See More Countries 15.0%
Main Suppliers
(% of Imports)
2022
United States 43.9%
China 19.6%
South Korea 3.7%
Germany 3.1%
Japan 3.0%
See More Countries 26.7%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President and head of government: Andrés Manuel López Obrador (since 1 December 2018)
Next Election Dates
Presidential: July 2024
Senate: July 2024
Chamber of Deputies: July 2024
Current Political Context
President Andrés Manuel López Obrador broke a two-party hegemony that had lasted for decades when he took office in December 2018, capitalising on social discontent. López Obrador’s government declared economic reforms as its priority, including reforms of the legislation in the energy, financial, fiscal, and telecommunications sectors; along with an overall objective of a more equitable income distribution.
With general elections scheduled for June 2024, the political environment has started to be influenced by this event. In the presidential race, Claudia Sheinbaum, a former Mexico City Mayor and frontrunner for López Obrador's Morena coalition, "We Keep Making History" (Seguimos Haciendo Historia/SHH), is set to compete against Senator Xóchitl Gálvez, the pre-candidate for the opposition Broad Front for Mexico (Frente Amplio por México/FAM). The FAM is the primary opposition alliance, comprising the National Action Party (PAN), the Institutional Revolutionary Party (PRI), and the Party of the Democratic Revolution (PRD). Meanwhile, one contender, Nuevo León Governor Samuel García from the Citizen's Movement (Movimiento Ciudadano/MC) party, has withdrawn his candidacy amidst controversy surrounding his temporary leave from his gubernatorial position.
Based on polling data, the ruling Morena party maintains a substantial lead over the conservative National Action Party (PAN) and the centrist Institutional Revolutionary Party (PRI).
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 2023, it is the largest political party in Mexico by number of members.
- National Action Party (PAN): centre-right to right wing, liberal conservative, Christian democratic party.
- Institutional Revolutionary Party (PRI): centre to centre-left, oldest political party in the country, constitutionalist, technocratic, social conservative, big tent party.
- Ecologist Green Party of Mexico (PVEM): centre-right, environmentalist, conservative.
- Labour Party (PT): left-wing, social democratic, labourist, left-wing nationalist.
- Citizens' Movement (MC): centre-left, social democratic, progressist.
- Party of the Democratic Revolution (PRD): centre-left to left wing, social democratic party.

Executive Power
As established by the Constitution, the Executive power is headed by the President of the United Mexican States. The President is both Head of State and of Government, as well as the Supreme Commander of the Armed Forces. He or she is elected by popular vote for a six year term and cannot be reelected. The President appoints the Cabinet.
Legislative Power
The Mexican legislative power is in the hands of the Congress of the Union, which is divided in two chambers: the Chamber of Deputies and the Senate of the Republic. The Chamber of Deputies has 500 members, 300 of which are elected through plurality voting and 200 through proportional representation, with a three-year mandate. The Senate of the Republic is composed by 128 members, 96 of which are elected through plurality voting and 32 through proportional representation, all with a six-year mandate.
 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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