Mexico Economic Forecast

Mexico Economic Outlook

September 12, 2018

Negotiators breathed a cautious sigh of relief in late August as they announced that Mexico and the United States had struck a deal to update NAFTA. Although the plan left the fate of Canada—the pact’s third partner country—in limbo, it calmed markets that had begun to fear the inevitable dissolution of the quarter-century-old agreement. Details of the bilateral talks suggest significant concessions by Mexico in the automotive sector, and early analyses of the tentative deal offered diverging views on its merits. The announcement came on the heels of revised second-quarter national accounts data, which confirmed weak first estimates held back by downbeat agricultural and industrial readings. Meanwhile, available data for the third quarter hints that a nascent domestically-driven turnaround could be afoot. In the wake of AMLO’s landslide victory on 1 July, economic sentiment has been riding high. That said, the manufacturing sector has yet to fully bounce back, and trade data in recent months has been far from encouraging.

Mexico Economic Growth

Tight domestic and U.S. job markets, as well as improved private-sector lending, are expected to support household spending this year. Diminishing political uncertainty, meanwhile, should buoy investment. Although external trade remains a concern, healthy factory output in the U.S. is seen bolstering manufacturing exports, while a clearer path forward for NAFTA should keep supply chains intact. In politics, most analysts expect AMLO to govern as a big-spending centrist. Met the why particular panelists expect growth of 2.2% in 2018, unchanged from last month’s estimate. For 2019, panelists see growth stable at 2.2%.

Mexico Economy Data

20132014201520162017
Population (million)118120121122124
GDP per capita (USD)11,77311,9649,6548,8049,325
GDP (USD bn)1,2751,3121,1681,0761,152
Economic Growth (GDP, annual variation in %)1.42.83.32.92.0
Domestic Demand (annual variation in %)1.41.92.82.82.9
Consumption (annual variation in %)1.82.13.43.73.0
Investment (annual variation in %)-3.43.15.01.1-1.5
Industrial Production (annual variation in %)-0.22.61.20.4-0.6
Retail Sales (annual variation in %)1.12.75.18.71.3
Unemployment Rate4.33.84.03.43.1
Fiscal Balance (% of GDP)-2.3-3.1-3.4-2.5-1.1
Public Debt (% of GDP)11.042.646.648.746.2
Money (annual variation in %)11.711.45.26.88.2
Inflation Rate (CPI, annual variation in %, eop)4.04.12.13.46.8
Inflation Rate (CPI, annual variation in %)3.84.02.72.86.0
Inflation (PPI, annual variation in %)1.30.91.311.35.2
Policy Interest Rate (%)3.503.003.255.757.25
Stock Market (annual variation in %)-2.21.0-0.46.28.1
Exchange Rate (vs USD)13.0414.7517.1820.7319.65
Exchange Rate (vs USD, aop)12.7613.3115.8818.6918.91
Current Account (% of GDP)-2.4-1.8-2.5-2.2-1.7
Current Account Balance (USD bn)-31.0-24.0-29.8-23.3-19.4
Trade Balance (USD billion)-1.2-3.1-14.7-13.1-11.0
Exports (USD billion)380397381374119
Imports (USD billion)381110395387420
Exports (annual variation in %)2.54.4-4.1-1.79.5
Imports (annual variation in %)2.84.9-1.2-2.18.6
International Reserves (USD)177193177177173
External Debt (% of GDP)31.132.635.838.538.0

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Mexico Facts

ValueChangeDate
Bond Yield8.08-0.24 %Sep 20
Exchange Rate18.83-0.29 %Sep 20
Stock Market49,5110.12 %Sep 20

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