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Mexico Real GDP growth is projected to reach 2.6% in 2023 and edge down to 2.1% in 2024. Consumption will be supported by the improvement in the labour market but will be dampened by high inflation. Investment will benefit from the easing of bottlenecks in global value chains and the relocation of manufacturing activity to Mexico. Export growth will be held back by the United States economic slowdown. Inflation will decline to 5.9% in 2023 and 3.7% in 2024. As inflation recedes, ending the fiscal support to mitigate the impact of high energy prices would create fiscal space to increase spending in education and infrastructure. Monetary policy should remain restrictive to ensure that inflation decreases durably towards target. Higher regulatory certainty, including in the energy sector, would help to make the most of the ongoing near-shoring of production processes to Mexico. The domestic economy remains resilient despite inflationary pressures Activity increased by 1.1% in the first quarter of 2023. Consumption remains resilient, supported by increases in formal employment and real wages. Remittances are high and consumer credit is gradually recovering, although it remains below its pre-covid level. Manufacturing has started to soften, as external demand from the United States has weakened. Investment in machinery and equipment is strengthening, favoured by near-shoring. Conversely, construction remains more than 10% below its pre-pandemic level. The unemployment rate is historically low and labour market participation continues to increase. Headline inflation has started to decline, reaching 6.2% (year-to-year) in April, while core inflation remains stickier, at 7.7%, with inflation in food-related services trending up.
Mexico
1. Seasonally adjusted quarterly rates. 2. All women aged 15-64. Source: OECD Economic Outlook 113 database; and OECD Short-term Labour Statistics. StatLink 2 https://stat.link/5ndfmz
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023