Mexico

Mexico - Economic forecast summary (November 2017)

 

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Growth is holding up above 2% despite the uncertain environment, fiscal consolidation and tighter monetary conditions. The economy will rebalance, with a higher contribution of exports and investment to growth while private consumption will decelerate as high inflation dents purchasing power and credit expansion slows, owing to monetary policy tightening. Construction activity will pick up from its historically low levels, reflecting reconstruction after the September earthquakes. Recent structural reforms and successful tenders in the energy sector are expected to boost private investment.

Fiscal consolidation will likely continue, putting a lid on the growth of public debt in relation to GDP and helping to keep financing costs low. The monetary policy rate will remain higher than in previous years as inflation continues to exceed the central bank’s target, limiting credit growth. As inflation returns to target, the monetary authorities should ease the policy stance to support investment and growth. While recent reforms have increased job formalisation and improved financial inclusion, poverty remains stagnant and large inequalities persist, including with respect to gender. Simplifying administrative procedures for accessing cash transfers and enhancing the role of social workers in reaching out to marginalised families would contribute to reducing extreme poverty. Better enforcement of the constitutional provision on gender discrimination would reduce existing high inequalities of gender.

Corporate and household debt is low and homeowners hold large financial and non-financial assets. Supervision of financial institutions is adequate but could be strengthened by granting those supervisory agencies which are not autonomous budgetary independence in order to allow them to allocate resources according to supervisory needs and priorities.  


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Other information

Economic Survey of Mexico (survey page)

 

 

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