Country Forecast Mexico September 2017 Updater

Country Forecast Mexico September 2017 Updater

  • September 2017 •
  • Report ID: 4980388 •
  • Format: PDF


  • The president, Enrique Peña Nieto of the Partido Revolucionario Institucional, who will leave office on December 1st 2018, will focus on implementing structural reforms approved in 2013-14, and on defending Mexico's interests during the talks with the US and Canada, which began in August, to renegotiate the North American Free-Trade Agreement (NAFTA). The current and next governments will struggle to boost both security and confidence in institutions after multiple corruption scandals at federal, state and local levels, problems that will persist into the medium term.
  • The political climate will become more uncertain in the run-up to the elections in July 2018. Public discontent and anti-establishment sentiment will boost the chances of Andrés Manuel López Obrador of the leftist Movimiento Regeneración Nacional (Morena), and The Economist Intelligence Unit believes that the election is his to lose. Nonetheless, there are strong risks to his chances of victory, particularly if a new alliance between two key opposition parties holds.
  • Despite uncertainty about US policy, alongside low business and consumer confidence, GDP will grow by 2.4% in 2017, before easing in 2018 owing to election concerns. It will pick up in 2019 before slowing notably in 2020 owing to a recession in the US that year. Growth will accelerate to 2.4% in 2021 as domestic and external conditions improve. The success of structural reforms will be hampered by weak institutional effectiveness under the current and next governments and, in the case of the energy reform, subdued oil prices. Still-low oil prices will dampen fiscal revenue and force restraint in capital spending.
  • Mexico is undergoing a demographic boom, but the benefits from this will be constrained by poor levels of education and the fact that a high proportion of the labour force (almost 60%) is employed in informal, low-productivity jobs. The consumer market boasts an expanding middle class and fairly high income levels compared with most of Mexico's regional peers. However, high levels of inequality and poverty will weigh on consumer demand, even though we expect the next government to boost social spending.
  • Mexico will seek to diversify export markets, but its fortunes will stay closely tied to those of the US. Foreign direct investment has underperformed, but will grow as energy and telecommunications reforms become well established. Despite US efforts to reduce the outsourcing of jobs to Mexico, the country will remain attractive owing to low wages, a large internal market, privileged access to the US market and a network of free-trade accords. However, many domestic sectors will continue to struggle, owing to weak competitiveness.


Loading...

We are very sorry, but an error occurred.
Please contact support@reportbuyer.com if the problem remains.