2023 US Investment Climate Statements (Part II): Mexico’s GDP growth and public debt decrease send positive signals despite domestic challenges  

This is the second in a series of five articles examining the US Department of State’s latest report on investment prospects for Argentina, Mexico, Colombia, Spain, and Brazil.
 

Mexico, the US’s second-largest trading partner in goods and services and its second-largest export market remains a key player in Latin America.
The latest 2023 Investment Climate Statements report from the US Bureau of Economic and Business Affairs states that "the Mexican economy averaged 2.1 percent growth in Gross Domestic Product (GDP) from 1994 to 2022 and recovered to pre-pandemic levels in 2022, growing 3.1 percent".

However, the US Department of State warns that "high inflation–mainly in food prices–and tighter monetary policy could affect Mexico’s purchasing power in 2023" and "any potential deceleration of the U.S. economy could affect demand for Mexican exports."
"Mexico’s conservative fiscal policy resulted in a primary deficit of 0.5 percent of GDP in 2022, and the public debt decreased to 49.4 percent from 50.8 percent of GDP in 2021. Banxico committed to upholding the central bank’s independence", the report adds.

While the United States-Mexico-Canada Agreement (USMCA) entered into force on July 1st, 2020, some areas remain unregulated, "complicating the operating environment for the telecommunications, financial services, and energy sectors."

Additionally, "Investors report the lack of a robust fiscal response to the COVID-19 crisis, regulatory unpredictability, a state-driven economic policy, and the shaky financial health of the state oil company PEMEX have contributed to ongoing uncertainties." The report also mentions that "Uncertainty about contract enforcement, insecurity, informality, and corruption continue to hinder sustained Mexican economic growth".
The United States continues to be Mexico’s main source of foreign direct investment (FDI), "with a stock of USD 207 billion (2021 per the International Monetary Fund’s Coordinated Direct Investment Survey)."