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North & Central America and Caribbean
Mexico |
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Last reviewed: 10 September 2009 |
Country information
ECONOMY
Basic Economic Facts
Nominal GDP: US$1,559 billion (2008 at PPP rates)
Nominal GDP per head: US$14,200 (2008)
Annual growth: 1.3% in 2003, 4.2% in 2004, 3.0% in 2005,4.8% in 2006, 3.3% in 2007, 1.4% in 2008.
Inflation: 4.0% in 2003, 5.2% in 2004, 3.3% in 2005, 4.0% in 2006, 3.76% in 2007, 6.3% in 2008.
Major industries: Manufacturing (including food, beverages, textiles, clothing, tobacco, chemicals, and motor vehicles); Commerce (restaurants and hotels); Transport and Communication; Financial Services; Tourism; Oil and gas and Electricity.
Major Trading Partners:
Exports (2008): US 80.2%, EU 5.8%, Canada 2.4%
Imports (2008): US 49.2%, Canada 3.0%, EU 12.6%, China 11.2%, Japan 7.2%.
Mexico's economy is the world’s thirteenth largest: about the same size as South Korea's and Russia's. It is a free market economy, with a mix of services, industry and agriculture. The country has many structural problems still to tackle as it seeks to modernise the economy, respond to the challenge of globalisation and raise living standards.
Mexico’s annual growth rates have hovered at an average of 3 – 4% in the 10 years leading up to the global economic crisis. Despite emerging relatively unscathed and with strong and stable financial institutions from the initial financial crisis in late 2008, Mexico was hit heavily by the resulting global economic downturn. As a result, the Mexican economy is expected to decline by around 7.0% in 2009, with a bounce back to +3.0% in 2010.
Inflation remains stable, although above the independent central bank’s 3%+/-1% tolerance limit. Income is very unequally distributed, between the richer and more industrial northern parts and the poorer, more agricultural, south. About 40% of the population live in poverty.
Mexico moved from a relatively closed economy to an almost completely open one when it joined the General Agreement on Tariffs and Trade (now the World Trade Organisation) in 1985. It continued this opening through the North American Free Trade Agreement (NAFTA) in 1994, which gives it access to the huge American and Canadian markets. In total, Mexico has Free Trade Agreements (FTAs) with 44 countries, including with the EU and with Japan.
Despite these broadly spread FTAs, Mexico's economy remains closely linked to the United States. Economic ups and downs in the US greatly influence Mexico's economic performance, and the US economic slowdown has dragged down Mexico’s exports, pushing the economy in to a very deep recession.
Mexico is one of the world’s top oil producers. Pemex, the state-owned oil company, has a constitutional monopoly on the exploitation of Mexico’s oil reserves. Although oil contributes only around 3% of overall GDP, the government is highly dependent on oil revenues for its income.
More than 12m Mexicans live and work in the US. A considerable number of these enter the country illegally. Collectively, the Mexican Diaspora provides more than US$20bn in remittances annually to their families in Mexico, making this the second largest source of revenue for the Mexican economy.
Mexico has rapidly developed its tourist sector in recent years. Tourism is now the fourth largest source of currency income for Mexico. The resorts of the Caribbean coast of the Yucatan peninsula (especially Cancun, Playa del Carmen and Cozumel) have grown very quickly. The Pacific coast (Puerto Vallarta, Huatulco, Los Cabos) have also increased in popularity in recent years.
Tourism was heavily affected in 2009 by an outbreak of H1N1 influenza in Mexico. While the disease has fortunately proved to be relatively mild in most cases, the negative publicity around the outbreak resulted in a significant drop off in both domestic and international tourism. Neither the WHO nor the FCO advise against travel to Mexico based on Swine flu, and the industry is now beginning to recover.
