The Economic Analysis of MEXICO

SUBMITTED BY:-
SUBMITTED TO:-
AMBALI DONGRE
DR. ABHISHEK PRATAP SINGH ANSHIKA SHUKLA
SACHAN RISHABH GOYAL
SAJAL JAIN
STUTI AGRAWAL
SURBHI MITTAL
 MEXICO
o Mexico officially the United Mexican States, is a country in the southern portion of North America. It
is bordered to the north by the United States; to the south and west by the Pacific Ocean.

o Mexico is organized as a federation comprising 31 states and Mexico City, its capital and largest
metropolis.

o Mexico's early history as a nation state was marked by political and socioeconomic upheaval.

o Mexico is a developing country, ranking 74th on the Human Development Index, but has the world's
15th-largest economy by nominal GDP and the 11th-largest by PPP, with the United States being its
largest economic partner.
 INTRODUCTION
o Mexico is among the world's 15 largest economies and is the second largest economy
in Latin America.
o According to the IMF, GDP contracted by an estimated -8.2% in 2020, due to the
outbreak of COVID-19.
o The country recorded a budget deficit of an estimated 2.8% in 2020, a rate that
should remain stable in 2021 and decrease to 2.3% in 2022.
o The sector is of pivotal importance to the Mexican economy, as oil production
accounts for one third of the government revenues.
o Inflation has been above target since 2017, however it slowed down to 3.4% in 2020.
o Some of the measures implemented by the government (adding up to 2% of GDP)
includes:-
1. higher health expenditure;
2. anticipating pensions payments by 8 months;
3. accelerating procurement processes and VAT refunds;
4. lending to companies and workers at a low rate;
5. and providing liquidity support and guarantees by development banks
 MAIN SECTORS OF INDUSTRY
o Mexico's economy is diversified, including hi-tech industries, oil production, mineral exploitation,
and manufacturing. 

o Mexico is the world's seventh agricultural power and ranks among the world's largest producers of
coffee, sugar, corn, oranges, avocados and limes. Cattle farming and fishing are also important activities
in the food industry.

o Mexico is also the world's fifth largest producer of beer and its largest exporter. 

o Mexico is among the world's leading producers of many minerals, including silver, fluorite, zinc and
mercury. Moreover, oil and gas reserves are one of the country’s most precious possessions.

o Mexico is also one of the world's ten largest car producers and due to significant real estate
investments, the construction sector is dynamic. 
 FOREIGN TRADE
o Mexico is highly dependent on foreign trade, which represented 78.2% of its GDP in 2019.

o The country mainly exports vehicles and their parts, automatic data processing machines, mineral
fuels, oil and machinery.

o As for imports, Mexico’s main purchases include petroleum oils, other than crude, vehicle parts, and
electronic integrated circuits.

o According to IMF Foreign Trade Forecasts, the volume of exports of goods and services decreased by
10.1% in 2020 and is expected to increase by 13.6% in 2021, while the volume of imports of goods and
services decreased by 15.3% in 2020 and is expected to increase by 21% in 2021.

o Mexico is heavily dependent on the commercial relations with its main trading partner – the United
States – which account for more than three-quarters of the country’s exports.
 POLITICAL OUTLINE

o The United Mexican state , commonly known As Mexico , is a federal constitutional republic located

in North America. Mexico is bound on the north by the united states ; on the south and west by
the North Pacific Ocean.
o Current Political Leaders - President: Andrés Manuel López Obrador (since 1 December 2018) –
MORENA
o Next Election Dates - Presidential: July 2024
Senate: July 2024
Chamber of Deputies: July 2021
o Mexico has a multi-party system. Under the transition to democratic pluralism, the centre of political
power has shifted away from the executive and towards the legislative branch and local governments.
The four largest political parties in the country are: - National Regeneration Movement (MORENA) ,
Institutional Revolutionary Party (PRI) , National Action Party (PAN) ,
Party of the Democratic Revolution (PRD) .
 The

POLITICAL OUTLINE

o Executive Power : As mentioned in the Constitution, the Executive power is headed by the
President of the United Mexican States. The President is both Head of State and Head of
Government, as well as the Supreme Commander of the Army Force. He or she is elected by
popular vote for a six year term and cannot be reelected. The President appoints the Cabinet.

o Legislative Power : The Mexican legislative power is in the hands of the Congress of the
Union, which is divided in two chambers: the Chamber of Deputies and the Senate of the
Republic. The Chamber of Deputies has 500 members, 300 of which are elected through
plurality voting and 200 through proportional representation, with a three-year mandate. The
Senate of the Republic is composed by 128 members, 96 of which are elected through
plurality voting and 32 through proportional representation, all with a six-year mandate
COVID 19 COUNTRY RESPONSE

o COVID -19 EVOLUTION :-  The COVID-19 pandemic evolution and the most up-to-date
statistics on the COVID-19 disease in Mexico, please visit the Mexican government
platform with the official data. Official information on the progress of the epidemic in
Mexico is consolidated by the secretary of health which provides a daily epidemiological
update and includes key national figures.  The international outlook magazine provides the
latest worldwide data in the daily situation reports published by the World Health
Organization as well as the global daily statistics on the coronavirus pandemic evolution
including data on confirmed cases and deaths by country.

o SANITARY MEASURES :- The Ministry of Tourism offers the following guidelines for
foreign visitors upon their arrival in Mexico. To avoid COVID-19 transmission is enforced
through a monitoring system. The traffic-light system is based on four colors: RED ,
ORANGE , YELLOW AND GREEN.
o TRAVEL RESTRICTIONS:-  The travel restrictions undertaken by the government of Mexico,
States will temporarily limit inbound land border crossings from Canada and Mexico to “essential
travel". This action does not prevent U.S. citizens from returning home .These restrictions are
temporary and went into effect on March 21, 2020. They will remain in effect through 11:59 pm
on  May 21, 2021.  This decision has been coordinated with the Governments of Mexico and
Canada.

o IMPORT AND EXPORT RESTRICTIONS :- All the measures applicable to movement of

goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual
restrictions on imports and exports, if applicable).

• Governments are enacting temporary trade measures that aim to restrict exports of vital medical
supplies and to liberalize imports of vital medical supplies, as well as other essential products.
 GROSS DOMESTIC PRODUCT (GDP)
▫ After the sharp decline in 2020 GDP is projected to grow at 3.6% in 2021 and 3.4 % in 2022.
▫ The countries economic growth is led by exports particularly from manufacturing firms integrated
into global value chains .
▫ Gross Domestic Product of Mexico grew 0.4% in the forth quarter of 2020 compared to the previous
quarter. This rate is 29 -tenths of one percent "} less than the figure of 3.3% published in the third
quarter of 2020.
▫ The year-on-year change in GDP was -3.1%, 14 -tenths of one percent more than the -4.5% recorded
in the forth quarter of 2020.
▫ Mexico is the 17th-largest exporter in the world. More than 90% of Mexico's trade is under 12 free
trade agreements. Mexico has agreements with 46 countries, more than any other nation. These trade
agreements are a big reason for Mexico's success
 Unemployment
▫ The unemployment rate in Mexico jumped to 3.9 percent in March of 2021 from 2.9 percent in the
corresponding month of the previous year and below market expectations of 4.2 percent, as the corona virus
pandemic continues to erase jobs in most industries.

▫ Mexico Population reached 127.19 million people in Dec 2020. Monthly Earnings of Mexico stood at
617.99 USD in Mar 2021. The country's Labour Force Participation Rate increased to 57.17 % in Mar 2021.

▫ The poor skill level of the workforce is a key factor behind Mexico’s disappointing economic performance.

▫ Unemployment in Mexico is broadly similar to that in other countries. Unemployment is highest for those
16 to 25, especially women. Surprisingly, however, it is higher among secondary school graduates than
among the less educated.
INVESTMENT

 In 2015, the country’s annual GDP growth rate was 3.29% which was better than many
developing countries.
 The easiest way to invest in MEXICO is with (ETFs) Exchange Traded funds.
 The economic resumption in the U.S. will favour Mexican manufacturing exports.
 Conversely, the poor economic rebound and the government’s controversial policies will prevent
gross fixed investments from gaining strong growth momentum.
 Financial service is one of the major components of Mexico’s services sector and has attracted
the most foreign investment.
 AMLO, as he is called, promised to review contracts for oil exploration
awarded to foreign firms. Mexico's oil industry needs foreign expertise
and investment.
CONSUMPTION

Private consumption: This is a measure of all the

money spent by consumers in the country to buy
goods and services. It is often called as consumer
expenditure. It even includes the rent you pay your
landlord.

Government final consumption

expenditure (GFCE) is an aggregate transaction
amount on a country's national income
accounts representing government expenditure on
goods and services that are used for the direct
satisfaction of individual needs
(individual consumption) or collective needs of
members of the community.
ECONOMIC GROWTH OF MEXICO
Mexico has struggled for three decades to raise trend growth rates. Despite a series of market-
opening reforms, including the North American Free Trade Agreement, Mexico's real GDP growth
has fallen behind that of other similar developing nations, both in Asia and in Latin America. As a
result, GDP per capita and other improvements in living standards have stagnated.

Mexico has a serious productivity challenge that can be traced to what is often called the “two
Mexico's"—a highly productive modern economy and a low-productivity traditional economy.
The two Mexico's are moving in opposite directions: while the modern sector flourishes, competes
globally, and raises productivity rapidly, in traditional Mexico (with very small, often informal
enterprises), productivity is plunging.

• Productivity has grown 5.8% a year in modern firms but has fallen 6.5% a year in traditional
firms
• Employees in traditional bakeries are 1/50th as productive as those in largest modern
companies
• Manufacturing in Mexico is 24% as productive as in the USA, even though top plants exceed
the US average
 CONCLUSION

With a population of almost 130 million, a rich cultural history and diversity, and

abundant natural resources, Mexico is among the 15 largest economies in the world and

the second largest economy in Latin America. The country has strong macroeconomic

institutions and it is open to trade.   

Over the last three decades Mexico has underperformed in terms of growth, inclusion,

and poverty reduction compared to similar countries. Its economic growth averaged just

above 2 percent a year between 1980 and 2018, limiting progress in convergence

relative to high income economies