Mexico is the second largest economy in Latin America, second only to Brazil in nominal GDP. The country actively participates in international trade (the foreign trade balance in 2022 amounted to 1.2 trillion US dollars, which is the highest value among the states of the region) and, together with the United States and Canada, is included in one of the world's largest free trade zones within the framework of the USMCA (until 2020 — NAFTA), which provides preferential conditions for access to the North American market.
The structure-forming sector of the Mexican economy is industry, which employs about a quarter of the population and generates about a third of GDP (manufactured goods form the basis of the country's exports). In addition , Mexico is one of the most open and attractive countries for foreign investors — in 2022, FDI inflows amounted to 35.3 billion US dollars (11.9% more than in 2021) and according to this indicator, Mexico ranked 11th in the world.
Over the past thirty years, Mexico has demonstrated low average annual growth rates of real GDP relative to other developing countries, which is explained by a number of external and internal factors.
Thus, the significant role of foreign trade in the economy makes the country dependent on fluctuations in the market of its main trading partner, the United States, which accounts for almost 80% of Mexico's exports and half of its imports. Internal deterrents may include a high crime rate, interrelated with the problem of poverty and socio-economic inequality, as well as contributing to the expansion of the shadow sector of the economy and, as a result, a decrease in the tax base.
In 2020, Mexico's real GDP decreased by 8.6% compared to 2019, which was the lowest value in the last thirty years. In 2021, due to the effect of deferred demand, economic growth in the country reached 5.7%, but in 2022 it slowed to 3.9% against the background of stagnant real GDP growth in the United States and an increase in inflation in Mexico itself.
Positive impact on the dynamics of the country's GDP in 2022 It had a reduction in the unemployment rate (to 2.8%) and, as a result, an increase in industrial production. By the end of 2023, the growth of the Mexican economy in the context of tightening monetary policy and depreciation of the national currency against the US dollar amounted to 3.2%.
According to forecasts, the growth rate of the real GDP will decrease to 2.4% in 2024 and to 1.4% in 2025 due to a slowdown in the economy of the United States and the continuation of tight monetary policy - the key rate in Mexico has been above 10% since the end of 2022 (4% in 2021).
One of the main drivers of the country's economic development is currently the global trend towards moving the production centers of multinational companies closer to their central offices (nearshoring). Mexico is one of the main beneficiaries of this trend, as large enterprises from the United States have been increasingly investing in Mexican industry in recent years due to geographical proximity and the presence of a single economic space within the framework of the USMCA.
An additional impetus was given to this process The COVID-19 pandemic, during which the disruption of logistics chains led to large losses for TNCs (including American ones) that had their enterprises in remote countries with lower production costs. As a result, many companies have revised their strategy and decided to expand their operations in Mexico, including through investments in industry. In the medium term, this factor will have a positive impact on the country's manufacturing sector, in the long term it will lead to a further increase in Mexico's dependence on the United States.
The latest and most noticeable increase in consumer prices in Mexico began in 2021, when the inflation rate was 5.7%. With rising food and energy prices in the world in 2022, the country's inflation rate reached 7.9%, and the Central Bank of Mexico (Banxico) announced the beginning of a two -year period of tightening monetary policy. From June 2021 to March 2023, the interest rate was increased by 725 basis points to 11.25%. By the middle of 2023 , there was a steady trend towards slowing price growth in the country, but the final annual The indicator, according to IMF estimates, remained at a high level of 5.5%, significantly exceeding the target 3%. Nevertheless, a decrease in the inflation rate allowed Banxico to begin a gradual easing of its monetary policy, and in March 2024, the central bank lowered the key rate by 25 basis points to 11,0%. According to the statements of the bank's representatives, the rate level helps to reduce the rate of price growth and will remain high until the target is reached, which, according to the IMF's expectations, will be reached by 2025-2026.
