Profile of the Mexican Economy
Background Information
Key Macro Data
Aspects of Development
Currency unit
Peso
Exchange rate system
Floating
$18k
Policy interest rate
Inflation (%)
Latest annual GDP
Growth (%)
Latest HDI ranking
74/187
3.75%
Income inequality HDI
ranking
67/187
2.7%
Member of a Regional
Trade Agreement
NAFTA
Pacific
Alliance
Gender inequality HDI
ranking
74/187
Unemployment rate
(% of labour force)
4.2%
Current account
balance (% of GDP)
-2.0%
< 1%
Fiscal balance
(% of GDP)
% of population living
in extreme poverty
-3.5%
Main corporate tax
rate (Per Cent)
30%
Life Expectancy at
birth (years)
76.8
Govt debt (% of GDP)
48%
Competitiveness rank
57/144
Yield on 10-Yr Govt
Bonds (Per Cent)
5%
Corruption Perception
Ranking
103/17
5
Gini coefficient (Latest
published estimate)
0.48
(High)
Inward FDI (% of GDP)
3%
Investment (% of GDP)
22%
Ease of Doing Business
Ranking
38/189
Remittances (% of
GDP)
4%
Gross national savings
(% of GDP)
20%
External Debt
(% of GDP)
32%
Aid (% of GDP)
Zero
GDP or GNI per capita
(US $, PPP)
2.6%
Contextual Background on Mexican Economy
Economic Structure
Development and Growth Issues / Policies
Share of GDP by value added (% of GDP)
3 factors limiting development progress
Primary: 4%
1/ Narrow tax base - <60% registered for tax
Industrial: 34%
2/ Widespread corruption and violence
Services: 62%
3/ High inequality, lack of inclusive growth
Main export industries (+ major firms)
3 policies used to improve the supply-side
1/ Motor vehicles and parts
1/ Reforms to energy, telecoms, finance
2/ Oil
2/ Infrastructure investment
3/ Audio and computer equipment
3/ Stronger anti-corruption policies
Key risks to sustainable growth
Long term challenges facing this country
1/ Reliance on US – 75% of exports go to USA
Challenge 1: Avoiding middle-income trap
2/ Large informal sector with low productivity
Challenge 2: Improving governance
3/ Low investment and saving as % of GDP
Challenge 3: Cut size of informal economy
Main Strengths and Weaknesses for Mexico
Economic / Competitive Strengths
Main Weaknesses in their Economy
1/ Low unit labour costs – attractive to FDI
1/ Concerns over violence and corruption
2/ Large / growing population (market size)
2/ Heavily dependent on oil revenues
3/ Competitive currency helping exports
3/ Informal labour market – dual economy
4/ Many free trade agreements completed
4/ High levels of income/wealth inequality
5/ Low unemployment and government debt
5/ Long tail of low productivity businesses
Other Notes
Other Useful Contextual Knowledge
• Mexico is developing a strong revealed
comparative advantage in manufacturing
• Unemployment is low but there is
significant under-employment in a dual
economy
• Fast growing middle class is attractive to
FDI especially from service businesses
• More than 90% of Mexican overseas trade
now covered by free trade agreements
• Mexico has over 4 million micro
businesses that employ the majority of
Mexicans – few have access to equity /
loan finance
• Key industries have been dominated by
monopolies such as Mexico Telecom and
Pemex (Oil). The lack of contestability
keeps prices and high and limits capital
investment and innovation