Mexico Economic Forecast

Mexico Economic Outlook

August 7, 2018

Disappointing second-quarter growth confirmed the many challenges facing the economy in the run-up to the 1 July general election, which Andrés Manuel López Obrador (AMLO) and his left-wing MORENA-led coalition won in a landslide. On a quarter-on-quarter basis, the services sector was resilient in the face of cool consumer sentiment amid political uncertainty and the wild volatility of the peso. Industrial output, however, contracted on weaker construction activity, although manufacturing metrics appear to have been buoyed by the weaker peso. Meanwhile, weak momentum heading into the third quarter translated into mixed data for July. Nevertheless, in the weeks since AMLO’s victory, the economic landscape has improved considerably; AMLO has since been embraced by the business leaders that once denounced him, and the prospect of new faces has given NAFTA negotiators room to walk back their hard lines.

Mexico Economic Growth

Household spending and exports are expected to drive growth this year. Tight job markets—both domestically and stateside—and improved private-sector lending should support private consumption, while healthy factory output in the U.S. should bolster manufacturing exports. Uncertainty over NAFTA continues to weigh heavily on investment prospects, although the odds of reaching a deal have improved in recent weeks. On politics, most analysts currently expect AMLO to govern as a centrist. Met the why particular panelists expect growth of 2.2% in 2018, down 0.1 percentage points 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 Yield7.91-0.24 %Aug 15
Exchange Rate19.14-0.29 %Aug 15
Stock Market48,5570.12 %Aug 15

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Mexico Economic News

  • Mexico: Consumer confidence hits decade-high following AMLO’s win

    August 3, 2018

    Consumer sentiment jumped in July on the heels of the 1 July general election, with the seasonally-adjusted consumer confidence index published by INEGI hitting a decade-high 111.7 points, up from a revised 88.6 points in June (previously reported: 88.0 points).

    Read more

  • Mexico: Banxico holds rates in August

    August 2, 2018

    At its 2 August monetary policy meeting, Banxico’s five-member board voted unanimously to hold the target rate at 7.75% after previously hiking rates ahead of the 1 July general election, a move broadly in line with market expectations.

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  • Mexico: Remittance inflows accelerate in June

    August 1, 2018

    Remittances totaled USD 3.1 billion in June (May: USD 3.2 billion), a robust 23.1% increase from the same month last year, accelerating from the revised 17.1% rise registered in May (previously reported: +19.8% year-on-year).

    Read more

  • Mexico: Growth disappoints in Q2 amid election-year challenges

    July 31, 2018

    A preliminary estimate for economic activity in the second quarter confirmed the challenges facing the economy in the run-up to the 1 July general election, with growth in the quarter coming up short against market expectations.

    Read more

  • Mexico: Trade deficit widens in June

    July 27, 2018

    Merchandise trade recorded a USD 0.9 billion deficit in June (May: USD 1.6 billion deficit), widening markedly from the USD 0.0 billion trade balance registered in June 2017.

    Read more

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