The Continually Developing Economy of Mexico
The economy in Mexico is among the largest in the world. According to the IMF, Mexico’s GDP (purchasing power parity) is the second largest in Latin America and 11th largest in the world. Since the North American Free Trade Agreement (NAFTA) took effect in 1994, Mexico has increased their manufacturing capabilities substantially to become a key supplier for the U.S. market. A large majority (90%) of Mexico’s trade falls under their numerous free trade agreements.
Due to increases in investment, the economy of Mexico has had strong growth in recent years. Couple this investing with a high demand on Mexican exports and it is easy to see why this is a country that continues a strong progress. The Mexican government has also made major reform in the communication, education, energy, and financial sectors, with a goal to increase Mexico’s overall economic competitiveness.
When looking into the economy in Mexico you will soon find there are a few different levels of disparity. Mexico has a high level of income inequality. Carlos Slim, the communications mogul of Mexico, is said to have a net worth of over 5% of national GDP. According to the Organization for Economic Co-operation and Development, Mexico has the second highest level of economic disparity in the world, surpassed only by Chile. It is important to note that this disparity is steadily declining, as social and education programs are becoming more widely available. The second division of disparity in Mexico is a factor of geography. The central and northern regions account for a much higher level of development and economic growth than those in the south.
Going forward, Mexico should sustain its macroeconomic success and continue to attract private investors. The country’s financial stability, due to increasing exports and further expansion, should continue for at least the medium term. The government has set goals to reduce their deficit to 2.5% of GDP over the next few years. This is a strong indicator of Mexico’s commitment to having a sustainable, risk-averse economy for decades to come.
Mexico Economic Statistics
Real annual growth rate (2015): 2.3%
Per capita income: US$18,900
Avg. inflation rate: 2.7%
Natural resources: Petroleum, timber, gold, silver, copper, iron, zinc
Primary sectors (62.4% of GDP): Hotels and restaurants, tourism, financial, trade, and transport and communication.
Secondary sectors (34.2% of GDP): Manufacturing, electricity and water supply, and construction.
Tertiary sectors (3.5% of GDP): Agriculture, forestry, fishing, farming, and mining.
Exports: US$430.9 billion: coffee, cotton, fruits, vegetables, manufactured goods, oil and oil products, silver
Major trade markets: U.S. (80.3%), Canada (2.7%), China (1.5%)
Imports: US$434.8 billion: agricultural machinery, aircraft, aircraft parts, automobile parts (repair, assembly), electrical equipment, metalworking machines, and steel mill products.
Major suppliers: U.S. (49.1%), China (16.6%), Japan (4.4%), Germany (3.5%)
Labor force: 53.0 million
Unemployment rate (2015): 4.5%