Mexico is the 14th largest economy in the world and second largest economy in Latin America. Because of the economy's vulnerability to external shocks, especially to the state of the U.S. economy, the Mexican growth slowed down in 2012 (3.3%) and again in 2013 (1.2%), contrary to all predictions. According to the authorities, the crisis should only be temporary and growth should reach around 3-4% in 2014.
The year 2013 was the most difficult for the Mexican economy since 2009. Due to the weak recovery of the US economy, the Mexican trading deficit deepened sharply and remittances from Mexicans living in the US dropped by 5%, despite being the country's second largest source of foreign currency. The reduction in public spending has also been an impediment to growth. The country also suffered damaged caused by two large hurricanes. Teh country has a number of advantages: foreign investment has been booming, its public finances are healthy, state debt is contained, infaltion is stable and the banking system is solid. The discovery of new gas fields has opened new possibilities for the country and a hope to turn away from nuclear energy. The 2014 budget The banking system is sound, and through a policy of budgetary and fiscal restraint, public debt has been contained at less than 40% of GDP and economic stability has been maintained. The discovery of gas fields in the country opens up and makes possible the withdrawal from nuclear energy. The 2014 budget is expansionist and plans on having the highest budget deficit (1.5% of the GDP) since the 2009 recession. It gives priority to infrastructures, education adn public safety and aims to encourage growth, job creation and improve the social situation. A tax increase is planned to finance unemployment insurance and pensions; the state monopoly on oil should be abandoned. A new strategy to fight against organised crime has also been adopted, since violence is hampering development.
Less than 5% unemployment is foreseen for 2014, but the informal sector is very large. Inequalities have increased, in terms of income but also in terms of exposure to natural disasters. More than 46.% of residents are poor. Insecurity related to crimes committed by drug cartels is a major problem.
|Main Indicators||2010||2011||2012||2013||2014 (e)|
|GDP (billions USD)||1,046.71||1,160.73||1,177.40e||1,327.02e||1,395.56|
|GDP (Constant Prices, Annual % Change)||5.1||4.0||3.6e||1.2e||3.0|
|GDP per Capita (USD)||9,158||10,034||10,059e||11,224e||11,687|
|General Government Balance (in % of GDP)||-3.3||-3.0||-3.2e||-3.0e||-3.1|
|General Government Gross Debt (in % of GDP)||42.4||43.6||43.5e||44.0e||45.8|
|Inflation Rate (%)||4.2||3.4||4.1e||3.6e||3.0|
|Unemployment Rate (% of the Labor Force)||5.4||5.2||5.0||4.8||4.5|
|Current Account (billions USD)||-3.23||-11.84||-14.18e||-17.75e||-20.65|
|Current Account (in % of GDP)||-0.3||-1.0||-1.2e||-1.3e||-1.5|
Source: IMF - World Economic Outlook Database - Last Available Data.
Note: (e) Estimated Data
Agriculture accounts for approximately 4% of the GDP and employs 13% of the active population, however, the scarcity of credit continues to penalize this sector. Mexico ranks amongst the world's largest producers of coffee, sugar, corn, oranges, avocadoes and limes. It is also the world's 5th biggest producer of beer and its number two exporter. It is amongst the world's leading producers of many minerals, including silver, fluorite, zinc and mercury, and its oil and gas reserves are one of its most precious possessions: Mexico is the world’s fifth largest producer of oil. The oil company PEMEX is the second most powerful company in Latin America, according to the industry journal América Economía. Cattle farming and fishing are also important economic activities.
The aerospace sector has grown sharply in the last five years, due to the presences of almost 190 companies, such as Bombardier, Goodrich, the Safran group and Honeywell, which together employ 30 000 people. Mexico is also one of the 10th major car producers. The hi-tech, information and software development sectors are also experiencing a real momentum, driven by the quality of the workforce, clusters and low operating costs, which allow for the establishment of call centers.
The tertiary sector contributes to around 60% of the GDP and the construction sector has been coming up since 2010 due to significant real estate investments.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||13.4||24.1||61.9|
|Value Added (in % of GDP)||3.5||34.8||61.7|
|Value Added (Annual % Change)||0.3||-0.7||2.1|
Source: World Bank - Last Available Data.
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Last Updates: July 2014