Economics of Mexico §

• Growth History and Economic stability

  • Since 2015, Mexico has not faced any major economic growth. Corruption, weak macroeconomic policy framework, low female participation rate (OECD).
  • 3.3% in 2015 fell to 2.2% in 2018 then (0.2) % in 2019 and (8.3) % in 2020 (WB)
  • The economy is projected to expand by 3.3% in 2022 and by 2.5% in 2023, after growing by 5.9% in 2021.

• Inflation

  • 2015 2.7% increases to 6% in 2017 then fell to 3.4% in 2020 then increase to 5.7% in 2021
  • Caused by budget deficit, money supply, exchange rate, foreign prices, wages, public sector prices, inflationary expectations, and the output gap.

• Unemployment

  • 2015 4.3%, fell to 3.3% in 2018 then increases back to 4.4% in 2020 and 2021
  • Studies aiming to find out whether it was a result of structural peculiarities of the Mexican labor market, an inadequate use of international standards and recommendations, or measurement problems.
  • For example, while in the United States there is a clear negative correlation between education and unemployment (the higher the educational level, the lower the unemployment rate), in Mexico the correlation is actually positive. The population segment with the lowest unemployment rate is the one that has “no primary education” and is associated with the poorest sectors of the economy.
  • the main reason why Mexico’s unemployment rate is so low is due more to structural characteristics of the labor market rather than to methodological differences or survey flaws.
  • The two main reasons for this phenomenon are: 1) a large part of this segment lives in rural communities and is self-sufficient and therefore is not considered unemployed; and, 2) the poorest part of the population cannot “afford” to be unemployed and therefore will accept any type of work, no matter how little it pays.
  • The absence of a public system of unemployment benefits partly accounts for Mexico’s relatively low unemployment rate in comparison with many other OECD countries.

• Main sectors (GDP by sector)

  • Agriculture: 3.5% of GDP and employ around 14% of the labor force of the nation (primary sector)
  • Industry: 33.8% of GDP and employ around 25% of the labor force of the nation (secondary sector)
  • Services: 61% of GDP and employ around 61% of the labor force of the nation