Mexico Economy & Trade

By | March 22, 2021

Mexico Economy & Development

Mexico Economy & Development

Estimated GDP: $ 1.199 billion (2018, estimated)

Per capita income (purchasing power parity): $ 18,101 (2018, estimated)

Rank of human Development (HDI): Rank 76 of 189 (2018)

Proportion of poverty according to the World Bank: 41.9% (2018)

Income distribution according to WB (Gini-Koeff.): 43.4 (2017)

Economic Transformation Index (BTI): 48 of 129 (2018)

 

Economic indicators, analysis, statistics

The German-Mexican Chamber of Industry and Commerce provides information about its tasks and gives useful tips on everyday issues.

On the website of the Mexican central bank Banco de México you will find explanations of monetary and currency policy, economic indicators, etc.

Economic Policy and Development Potential

The structural change to an export-oriented economy was consolidated through the signing of several trade agreements (NAFTA, global agreement with Europe) and international agreements on economic and political cooperation.

There is an enormous development potential in the country for highly diversified small and medium-sized companies that are already highly productive but have not yet found a place in the export economy.

Mexico was able to successfully diversify exports of a wide variety of products and is today, for example, the second largest steel producer in Latin America and the second largest oil producer on the American continent after the USA.

Mexico is rich in minerals and metals such as gold, silver, iron, zinc, and lead. Mining companies from Canada, Great Britain and the USA are granted concessions to exploit the mines.

The main agricultural products are: corn, wheat, soy, rice, beans, wool, tobacco, coffee, beef, poultry, wood and countless kinds of fruits and vegetables.

Products and trade

Products and production methods

Painting - The Bean Eater by Annibale Caracci

Painting – The Bean Eater by Annibale Caracci

A high-tech industrial production and a modern service sector are represented in Mexico, as are subsistence-oriented agriculture and traditional handicrafts and small businesses.

Trade: domestic and foreign trade, trade balance

View of the Calle Madero and the Torre Latinoamericana in the historic center of Mexico City

View of the Calle Madero and the Torre Latinoamericana in the historic center of Mexico City

According to iamhigher, Mexico is Latin America’s largest exporter and importer. The geographic location of Mexico is proving to be a dynamic location for trade and investments in Latin America, Asia, Europe, but above all in the USA, which is the most important trading partner. Around 85% of Mexican exports and 50% of imports go to the USA and Canada. Foreign direct investment has increased in recent years, with investments coming mainly from the USA, Canada, Spain and Germany. Mexico has had a slight trade deficit for years. With their money transfers, Mexican migrant workers make a major contribution to private consumption.

Mexico has managed to diversify its exports into several industries, which reduces the often onerous dependence on the development of oil prices. The improvement of the domestic economic conditions is necessary in order to compensate for external economic pressures. As agreed in the Pacto por México, the political measures that should be implemented with this aim include: dismantling oligopoly and monopoly structures, strengthening competition and the private economy, combating the shadow economy, increasing tax revenue and the Fight crime.

Mexico ranks 22nd in the ranking of German trading partners in the export sector. The volume of trade between Germany and Mexico was around $ 23 billion in 2018 (compared to around $ 17.4 billion in 2015). A large part of this is capital that has been invested in the automotive industry, plus further investments in the chemical and pharmaceutical industries. Germany is Mexico’s most important trading partner in the EU.

The free trade agreement with Europe, which came into force in 1997, has been supplemented by new products and services over the past 20 years. Relations with Germany in particular and with Europe in general have become more important to the Mexican government. In particular, since Donald Trump took office in the US and the associated threats to impose punitive tariffs on goods imported from Mexico into the United States, the Mexican government has tried to diversify its trade relations worldwide. An important step in this direction is the renewal of the trade agreement with the European Union – Mexico’s third most important trading partner after the USA and China. After the negotiation rounds began in May 2016, Mexico and the EU achieved in April 2018 reached an agreement on the agreement.

Before the agreement was reached, civil society organizations demanded that renegotiations should not only be limited to including other areas in the agreement, but should also include better mechanisms for the protection of human rights. A central point in this constellation is the behavior of European companies in Mexico and specific demands with regard to water pollution, environmental pollution and deterioration in working conditions.