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Profile of the Mexican Economy Key Macro Data Latest annual GDP Growth (%) 2.6% GDP or GNI per capita (US $, PPP) $18k Inflation (%)2.7% Unemployment rate.

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Presentation on theme: "Profile of the Mexican Economy Key Macro Data Latest annual GDP Growth (%) 2.6% GDP or GNI per capita (US $, PPP) $18k Inflation (%)2.7% Unemployment rate."— Presentation transcript:

1 Profile of the Mexican Economy Key Macro Data Latest annual GDP Growth (%) 2.6% GDP or GNI per capita (US $, PPP) $18k Inflation (%)2.7% Unemployment rate (% of labour force) 4.2% Fiscal balance (% of GDP) -3.5% Govt debt (% of GDP)48% Yield on 10-Yr Govt Bonds (Per Cent) 5% Investment (% of GDP)22% Gross national savings (% of GDP) 20% Background Information Currency unitPeso Exchange rate system Floating Policy interest rate3.75% Member of a Regional Trade Agreement NAFTA Pacific Alliance Current account balance (% of GDP) -2.0% Main corporate tax rate (Per Cent) 30% Competitiveness rank57/144 Corruption Perception Ranking 103/17 5 Ease of Doing Business Ranking 38/189 External Debt (% of GDP) 32% Aspects of Development Latest HDI ranking74/187 Income inequality HDI ranking 67/187 Gender inequality HDI ranking 74/187 % of population living in extreme poverty < 1% Life Expectancy at birth (years) 76.8 Gini coefficient (Latest published estimate) 0.48 (High) Inward FDI (% of GDP)3% Remittances (% of GDP) 4% Aid (% of GDP)Zero

2 Contextual Background on Mexican Economy Economic Structure Share of GDP by value added (% of GDP) Primary: 4% Industrial: 34% Services: 62% Main export industries (+ major firms) 1/ Motor vehicles and parts 2/ Oil 3/ Audio and computer equipment Key risks to sustainable growth 1/ Reliance on US – 75% of exports go to USA 2/ Large informal sector with low productivity 3/ Low investment and saving as % of GDP Development and Growth Issues / Policies 3 factors limiting development progress 1/ Narrow tax base - <60% registered for tax 2/ Widespread corruption and violence 3/ High inequality, lack of inclusive growth 3 policies used to improve the supply-side 1/ Reforms to energy, telecoms, finance 2/ Infrastructure investment 3/ Stronger anti-corruption policies Long term challenges facing this country Challenge 1: Avoiding middle-income trap Challenge 2: Improving governance Challenge 3: Cut size of informal economy

3 Main Strengths and Weaknesses for Mexico Economic / Competitive Strengths 1/ Low unit labour costs – attractive to FDI 2/ Large / growing population (market size) 3/ Competitive currency helping exports 4/ Many free trade agreements completed 5/ Low unemployment and government debt Other Notes Mexico is developing a strong revealed comparative advantage in manufacturing Unemployment is low but there is significant under-employment in a dual economy Fast growing middle class is attractive to FDI especially from service businesses More than 90% of Mexican overseas trade now covered by free trade agreements Main Weaknesses in their Economy 1/ Concerns over violence and corruption 2/ Heavily dependent on oil revenues 3/ Informal labour market – dual economy 4/ High levels of income/wealth inequality 5/ Long tail of low productivity businesses Other Useful Contextual Knowledge Mexico has over 4 million micro businesses that employ the majority of Mexicans – few have access to equity / loan finance Key industries have been dominated by monopolies such as Mexico Telecom and Pemex (Oil). The lack of contestability keeps prices and high and limits capital investment and innovation


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