Economic outlook

Mexico suffered its worst economic contraction of 8.3% in 2020, before growth of about 6% in 2021. The COVID-19 pandemic continues to hit Mexican firms, employment and households. The IMF expects the economy to grow at 2.8% in 2022. Tight monetary policy, inflation and lower growth in the US, a key export partner, remain key challenges in the near-term.

Beyond the pandemic, Mexico’s medium-term growth prospects have significantly weakened due to chronically weak investments and uneven implementation of structural reforms, including the reversal of private-oriented energy sector reforms. For instance, the current administration’s suspension of auctions for oil blocks has dampened private investment in the energy sector. Such auctions were expected to attract foreign investors in exploration and eventually oil production through significant investment. Chronic structural issues remain, including low levels of education and a large informal workforce.

The pandemic caused significant increases in poverty, inequalities and gender gaps. Per capita incomes are gradually recovering as economic growth resumes, reaching an estimated US$10,000 in 2021. Although incomes are likely to continue to rise, they will remain lower than regional heavy weights, Brazil and Argentina, in the foreseeable future.