Mexico’s free market economy is large and relatively stable, although like most countries, has been buffeted by the global pandemic in 2020. Its gross domestic product (GDP) of nearly US$1.3 trillion was ranked fifteenth globally by the World Bank in 2019. It is the second largest economy in Latin America.
Mexico is the third largest trading partner of the United States and represents the second largest export market for U.S. products and services. Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994, Mexico’s share of U.S. imports has increased from 7 percent to 12 percent and its share of Canadian imports has doubled to 5 percent. Mexico also has free trade agreements with over 50 countries. More than 90 percent of global trade conducted by Mexico is under free trade agreements.
The Mexican economy is increasingly dominated by the country’s private sector and is driven by expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution and airports. Mexico is among the world’s top 25 countries in its proportion of manufactured goods exported that are high-tech.
Although Mexico has had a comparatively strong global economy, income distribution remains highly unequal. The country’s per capita income is roughly one-third that of the U.S. and nearly 50 percent of the country is classified as poor.
Because of the pandemic, Citibanamex, one of Mexico’s largest banks, forecasts that Mexico’s economy will shrink by 9 percent in 2020. Exports are expected to decline by 18 percent, personal consumption to drop by 11.5 percent and investment to decline by nearly 20 percent. Inflation is expected to be 3 percent by the end of 2020.