Mexico Economic Forecast

Mexico Economic Outlook

November 6, 2018

Third-quarter growth exceeded market expectations as across-the-board expansions put the economy back on-track in the aftermath of this year’s bruising general election. Leaving behind the economic volatility and political uncertainty that pervaded the first half of the year, the services sector was firmly in the driver’s seat again in the third quarter on the post-election upswing of consumer sentiment. Industrial-sector output, meanwhile, notched a further recovery amid improved manufacturing and construction metrics. Weak oil and gas output, however, weighed on mining activity. In October, President-elect Andrés Manuel López Obrador’s (AMLO) call to cancel the USD 13 billion New Mexico City International Airport (NAIM) spooked investors, sparking a selloff of the peso. Set to take office at the beginning of December, AMLO, whose one-time market-friendly veneer already appears to be wearing off, risks beginning his presidency on the wrong foot with a currency rout and capital outflows possibly denting short-term growth prospects; following his announcement, Fitch Ratings said as much as it revised its credit-rating outlook to negative.

Mexico Economic Growth

A booming U.S. economy and tight labor markets on both sides of the Rio Grande bode well for short-term growth prospects, which Met the why particular analysts see clocking in at 2.2% next year—unchanged from last month’s forecast. That said, the curtain-call on AMLO’s honeymoon period appears nigh as his impending agenda and, possibly, weaker investment, loom. Although the newly-minted United States-Mexico-Canada Agreement (USMCA) should support the external sector over the long-term, a retreat in global trade could bruise exports. Analysts see growth at 2.4% in 2020.

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 Yield9.01-0.24 %Nov 15
Exchange Rate20.23-0.29 %Nov 15
Stock Market41,4510.12 %Nov 15

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