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 | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
| GDP (billions USD) | 1,465.85 | 1,811.47 | 1,994.15 | 2,081.18 | 2,171.30 |
| GDP (Constant Prices, Annual % Change) | 3.9 | 3.2 | 2.1 | 1.5 | 1.8 |
| GDP per Capita (USD) | 11,266 | 13,804 | 15,072 | 15,607 | 16,160 |
| General Government Balance (in % of GDP) | -4.2 | -4.2 | -5.8 | -2.8 | -2.8 |
| General Government Gross Debt (in % of GDP) | 54.1 | 52.7 | 54.7 | 55.1 | 55.5 |
| Inflation Rate (%) | n/a | 5.5 | 3.8 | 3.1 | 3.0 |
| Unemployment Rate (% of the Labour Force) | 3.3 | 2.9 | 3.1 | 3.4 | 3.6 |
| 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.
