Mexico Economy

Mexico Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax System

Basic data

The country’s economy, which is closely linked to international trade chains, fell into recession already in 2019 after a decade of growth (-0.1% of GDP). It was in this state that the COVID-19 pandemic caught up with it and hit it at several sensitive points – foreign trade, the oil industry and tourism.

2021 ended with GDP growth of 4.8%, while 2022 is forecast to grow by 1.9% GDP. Real GDP is estimated to return to pre-crisis values ​​in 2023/24 at the earliest. State investments are directed towards large infrastructure projects (especially transport and energy), but other sectors remain underfunded.

According to, Mexican exports will continue to benefit from a strong recovery in the US economy. Merchandise exports from Mexico are on the rise and will reach a value of 49billion USD in 2021. In 2021, the trade balance was -$1billion and the current account balance was -$billion (-0.4% of GDP). Domestic consumption will be supported by the gradual improvement of the situation on the labor market. Industrial production grew by 6.7% in 2021.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) -0.1 -8.3 4.8 1.9 2.6
GDP/population (USD/PPP) 20,950.00 19,290.60 20,650.00 21,710.00 22,610.0
Inflation (%) 3.6 3.4 5.7 5.1 4
Unemployment (%) 3.5 4.4 4.1 4 4
Export of goods (billion USD) 460.7 417.7 494.2 537.8 560
Import of goods (billion USD) 455.3 383.2 505.7 553 577.4
Trade Balance (Billion USD) 5.2 34 -11.5 -15.2 -17.3
Industrial production (% change) -1.7 -10.2 6,7 1.5 1.6
Population (millions) 127.6 128.9 130.3 131.6 132.8
Competitiveness 50/63 53/63 55/64 ON ON
OECD export risk 03.VII 03.VII 03.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -2.8
Public debt (% of GDP) 53.3
Current account balance (billion USD) -4.9
Taxes 2022
F.O 1.92 – 35%
VAT 16%

Mexico’s fiscal policy response to the pandemic has been one of the weakest in the region, which has a long-term negative impact on consumption growth and the speed of economic recovery. On the other hand, a fiscally and monetarily conservative policy maintains relatively stable debt dynamics of the country. For the coming period, economic growth is expected to decline from 4.8% for 2021 to 1.9% in 2022, and slow growth (around 2.5%) awaits the country in the following years as well (2023-26). Real GDP will not return to 2018 levels until 2023 at the earliest, which represents the loss of four years of much-needed economic growth. The low efficiency of the state administration, as well as the government’s lukewarm attitude towards the needs of the business sector, also contribute to slow growth.

State budget revenues increased in 2021 due to the recovery in oil prices and increased economic performance.

In 2021, the national debt decreased slightly compared to 2020, in relative terms from 5to 53% of GDP. The state budget deficit in 2021 represented 2.8% of GDP. However, despite the government’s reluctance to take on debt, the national debt will remain higher in the coming years compared to the pre-pandemic period (52% compared to 47%) in the coming years due to the absence of more fundamental fiscal incentives for the state to support the economy, and the associated lower revenues of the state budget.

The average annual rate of inflation expressed by the increase in the average annual index of consumer price growth rose sharply from 3.4% (2020) to 5.7%, well above the central bank’s target of 3%. At the end of the year, inflation even exceeded 7%, which is the highest rate since April 2001. During the year, the Central Bank of Mexico responded to rising inflation by repeatedly increasing the base interest rate to 6.5%.

In 2021, the construction of a number of planned 68 investment projects co-financed by the government and the private sector, totaling USD 26 billion, was launched.

Banking system

Mexico’s banking system is overseen by the independent Central Bank of Mexico. The banking sector is mainly in private hands, but in addition to classic commercial banks, there are also seven development banks (e.g. pro-export BANCOMEXT). The largest commercial bank is Banamex – until now owned by the American Citigroup. In January 2022, Citigroup announced the sale of Banamex. According to preliminary information, the sale should be completed during the spring/summer of 2022. The Spanish banking house BBVA owns the Bancomer bank known as BBVA Bancomer. Others are Spain’s Santander, Britain’s Banorte and HSBC, and Canada’s Scotiabank. All commercial banks provide standard banking services.

Detailed information on the Mexican banking sector is provided by the websites of the Central Bank of Mexico (Banco de México) and the Mexican Banking Association (Asociación de Bancos de México), where you can find all the necessary data on the financial groups that operate in the Mexican banking and financial market (banks, insurance companies, exchange offices, stock exchanges, factoring and investment companies, etc.), including legal standards, statistical data and annual reports of individual financial institutions.

Tax system

The Mexican tax system is quite complicated. According to the level of state power that collects them, it distinguishes three types of taxes: federal, state and local. At the federal level, financial administration is covered by the Ministry of Finance and its subordinate Office for Financial Administration (Sistema de Administración Tributaria, SAT). The most important federal taxes are 1) personal and corporate income tax, 2) value added tax, and 3) excise tax on special services and products. Income tax accounts for roughly 40% of the total volume of taxes collected, as does value added tax.

Income tax (Impuesto sobre la Renta, ISR) is levied on income from tax residents – Mexican citizens and legal entities – on all their worldwide income, but also on foreigners and foreign entities on their income in Mexico. Specific settings deal with agreements on the avoidance of double taxation, such an agreement has been concluded between Mexico and the Czech Republic. In the case of natural persons, the tax is set progressively with a percentage rate from 1.92 to 35%, the income of legal entities is taxed at a 30% linear rate.

Most goods and services are subject to value added tax (Impuesto al Valor Agregado, IVA). The base rate is 16%. Food, medicines and books are exempt from the tax. In some border areas with the US, the value added tax has been reduced to 8%.

The rate of excise duty varies according to the commodities on which it is levied. Of the most common: alcohol 21%, beer 10%, tobacco products 120%, fuel roughly MXN 4 per liter. Property taxes are also collected, such as a 2% real estate transfer tax or real estate tax, which depends on the location and price of the property.

Mexico Economy