Mexico: Economic and Political Outline

Economic Overview

Mexico is the 13th largest economy in the world and second largest economy in Latin America. Although its GDP fell sharply in 2009 (-6.5%), economic growth rebounded in 2010-2011. However, its economy is vulnerable to external shocks, especially to the state of the U.S. economy, which is why the Mexican growth slowed down again in 2012 (3.3%). Growth should remain at around 3.5% in 2013 according to the most recent estimates, which have downgraded previous figures.

The outlook for the Mexican economy remains favorable. The banking system is sound, and through a policy of budgetary and fiscal restraint, public debt has been contained at less than 40% of GDP and economic stability has been maintained. The discovery of gas fields in the country opens up and makes possible the withdrawal from nuclear energy. President Pena Nieto has announced a reforms program including the liberalization of the economy in order to attract investors, investment in infrastructure, as well as measures for a fairer tax system, better coverage of the social security system and more favorable pensions. The government aims to reach a balanced budget in 2013, thanks to strict spending control. Some reforms have already been undertaken, affecting pensions in the public sector, public finance, the electoral system and the criminal justice system; however, more structural reforms are still needed to address the country's growth potential and competitiveness and to remedy social inequalities. The education system is struggling and the country is heavily dependent on oil revenues and remittances from migrants living in the United States. Security and the fight against drug trafficking remain major concerns and violence is also hampering development.

Less than 5% unemployment is foreseen for 2013, but the informal sector is very large. Inequalities have increased, in terms of income but also in terms of exposure to natural disasters. 46.% of residents are poor. Insecurity related to crimes committed by drug cartels is a major problem.

Main Sectors of Industry

Agriculture accounts for approximately 4% of the GDP and employs 13% of the active population, however, the scarcity of credit continues to penalize this sector. Mexico ranks amongst the world's largest producers of coffee, sugar, corn, oranges, avocadoes and limes. It is also the world's 5th biggest producer of beer and its number two exporter. It is amongst the world's leading producers of many minerals, including silver, fluorite, zinc and mercury, and its oil and gas reserves are one of its most precious possessions: Mexico is the world’s fifth largest producer of oil. The oil company PEMEX is the second most powerful company in Latin America, according to the industry journal América Economía. Cattle farming and fishing are also important economic activities.

The aerospace sector has grown sharply in the last five years, due to the presences of almost 190 companies, such as Bombardier, Goodrich, the Safran group and Honeywell, which together employ 30 000 people. Mexico is also one of the 10th major car producers. The hi-tech, information and software development sectors are also experiencing a real momentum, driven by the quality of the workforce, clusters and low operating costs, which allow for the establishment of call centers.

The tertiary sector contributes to around 60% of the GDP and the construction sector is coming up again due to real estate investments.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

67.0 /100

Position:

Moderately Free

World Rank:

50/177

Regional Rank:

3/3

Distribution of Economic freedom in the world
Source: 2013 Index of Economic freedom, Heritage Foundation

Sources of General Economic Information

Ministries

Ministry of the Economy
Ministry of Social Development
Ministry of Finance
Ministry of Energy

Statistical Office

National Institute of Statistics and Geography

Central Bank

Bank of Mexico

Stock Exchange

Mexican Stock Exchange

Other Useful Resources

Ministries of Mexico
National Institute of Statistics and Geography

Main Online Newspapers

Finance
Economy
Universal

Economic Portals

Trade in Mexico

Political Outline

Type of State

Mexico's official name is Mexican United States. It is a federal republic based on presidential democracy.

Executive Power

As established by the Constitution, the Executive power is headed by the President of the United Mexican States.
The President is both head of state and head of government.  He is Supreme Commander of the Army Force.
The President is elected by popular vote and cannot be reelected. The presidential term lasts six years.

Legislative Power

The Mexican legislative power is in the hands of the General Congress  which is divided in two chambers: the Deputies and the Senators.
The Chamber of Deputies has 500 members, from which 300 are elected according to the principle of plurality. The remaining 200 are elected through the rule of proportional representation.
The Chamber of Senators applies in the same manner the principle of proportional representation by integration, electing 32 of its 96 members every two years.

Main Political Parties

Mexico has a multi-party system. There are three major political parties in the country:
- PAN (National Action Party) – a conservative liberal party, to which the actual President of the Republic belongs.
- PRI (Institutional Revolutionary Party) - the oldest political party in the country, it governed for 70 years, it is the center or middle party.
- PRD (Party of the Democratic Revolution)- a left wing socialist party.

Current Political Leaders

President: Enrique Peña Nieto (since 1st december 2012) - PRI

Next Election Dates

Presidential: July 2018
Senate: 2018
Chamber of Deputies: 2015

Indicator of Freedom of the Press

World Rank:

153/179

Evolution:

3 places down compared to 2011

Source: Worldwide Press Freedom Index 2013, Reporters Without Borders