{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with Mexico",
  "publication": "IMF News, November 5, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/11/05/pr21323-mexico-imf-executive-board-concludes-2021-article-iv-consultation-with-mexico",
  "canonical": "https://www.imf.org/en/news/articles/2021/11/05/pr21323-mexico-imf-executive-board-concludes-2021-article-iv-consultation-with-mexico",
  "overlayPath": "/en/news/articles/2021/11/05/pr21323-mexico-imf-executive-board-concludes-2021-article-iv-consultation-with-mexico/index.md",
  "summary": "The Mexican economy is rebounding from its deepest recession in decades, driven by strong U.S. growth and the pandemic-related re-opening of sectors.",
  "publishDate": "2021-11-05",
  "sections": [
    {
      "heading": "Economic outlook and recent performance",
      "content": "- The Mexican economy is rebounding from its deepest recession in decades, driven by strong U.S. growth and the pandemic-related re-opening of sectors.\n- After shrinking 8.3 percent in 2020, real GDP is forecast to grow by 6.2 percent in 2021 and 4 percent in 2022.\n- The current account, which jumped to a record surplus of 2.4 percent of GDP in 2020, has moderated and is nearly balanced.\n- Broad money growth: 13.4 percent (2020), 9.2 percent (2021 proj.), 6.6 percent (2022 proj.).\n- Credit to non-financial private sector (% change): 1.5 (2020), 3.3 (2021 proj.)."
    },
    {
      "heading": "Humanitarian and social impacts of COVID-19",
      "content": "- There have been over half a million excess deaths.\n- Under-employment remains very high.\n- Poverty that was high before the pandemic has increased further.\n- The young have experienced sizable learning losses with potentially harmful long-term consequences.\n- Poverty headcount ratio (% of population, 2020): 43.9"
    },
    {
      "heading": "Fiscal, public debt, and monetary policy",
      "content": "- The government has emphasized a conservative fiscal stance with a focus on containing debt.\n- Overall deficit target: 4.2 percent of GDP in 2021.\n- Increased allocations for health spending and public investment in 2021.\n- Efforts to combat tax evasion have contributed to generally better-than-expected revenues.\n- Gross debt of the public sector (by staff’s definition) is estimated at about 60 percent of GDP.\n- With inflation well above its target, the central bank has raised the policy rate to 4.75 percent.\n- Consumer prices, end of period (%): 3.2 (2020), 5.9 (2021 proj.), 3.1 (2022 proj.).\n- Consumer prices, period average (%): 3.4 (2020), 5.4 (2021 proj.), 3.8 (2022 proj.).\n- 1-month Treasury bill yield (in percent): 5.3 (2020), N.A. (2021 proj.)."
    },
    {
      "heading": "Financial sector and external buffers",
      "content": "- Banking sector: strong capital positions; nonperforming loans are relatively low at 2.4 percent of total loans (as of May 2021).\n- International reserves: 199.1 (US$ billions, 2020), 211.8 (2021 proj.), 221.5 (2022 proj.).\n- Gross international reserves in months of next year's imports of goods and services: 4.6 (2020), 4.8 (2021 proj.).\n- Total external debt (% GDP): 43.1 (2020), 36.8 (2021 proj.), 36.4 (2022 proj.).\n- Foreign direct investment (% GDP): 2.3 (2020), 1.9 (2021 proj.)."
    },
    {
      "heading": "Executive Board’s assessment and policy recommendations",
      "content": "- Directors commended authorities for maintaining economic stability through a challenging period, underpinned by very strong macroeconomic policies and institutional policy frameworks.\n- Given economic scarring risks and Mexico’s low long run growth performance, Directors underscored the need to safeguard the recovery and promote stronger, more inclusive, and greener growth.\n- Fiscal policy:\n  - Directors generally saw merit in additional well targeted fiscal support using available fiscal space for health and education, social safety nets, and quality public investment.\n  - A few Directors considered the authorities’ conservative approach appropriate to contain public debt.\n  - Directors stressed the importance of enhancing spending efficiency and containing the projected rise in pension spending.\n  - A credible medium term tax reform, to be implemented as the economy strengthens, would help finance needed social and public investment spending and put the public debt to GDP ratio on a firm downward trajectory.\n- Monetary policy:\n  - Recent inflationary pressures, while mostly temporary, pose a difficult balancing act amid still sizable slack.\n  - Directors recommended a gradual, data driven pace of policy normalization that carefully balances support for the recovery while keeping medium term inflation expectations well anchored.\n  - Continued efforts to enhance the central bank’s communications would be helpful; a strategic review of the monetary policy framework could be conducted at the appropriate time.\n  - The flexible exchange rate should continue to serve as an external shock absorber.\n- Structural and sectoral recommendations:\n  - Reform Pemex’s business strategy and governance.\n  - Implement a comprehensive climate strategy, considering the scope and level of carbon pricing as part of broader mitigation and adaptation actions and redistribution policies.\n  - Leverage Mexico’s large and diverse renewable resource base to foster a cheaper, more sustainable, and competitive energy sector.\n  - Tackle impediments to productivity growth through well prioritized structural reforms: promote labor market formality, narrow gender gaps, foster financial inclusion, and improve governance.\n  - Calibrate minimum wage increases to productivity growth.\n  - Advance AML/CFT reforms and address outstanding recommendations from the 2016 FSAP."
    },
    {
      "heading": "Key economic and country statistics (selected)",
      "content": "- Population (millions, 2020): 127.8\n- GDP per capita (U.S. dollars, 2020): 8,403.6\n- Quota (SDR, millions): 8,912.7\n- Main export products: cars and car parts, electronics, crude oil\n- Main import products: cars and car parts, electronics, refined petroleum\n- Key export markets: United States, EU and Canada\n- Key import markets: United States, China, EU"
    },
    {
      "heading": "Mexico: Selected Economic Indicators, 2020–22 (selected series)",
      "content": "- Output\n  - Real GDP (% change): -8.3 (2020); 6.2 (2021); 4.0 (2022)\n- Employment\n  - Unemployment rate, period average (%): 4.4 (2020); 4.1 (2021); 3.7 (2022)\n- General government finances\n  - Revenue and grants (% GDP): 24.5 (2020); 24.0 (2021); 23.2 (2022)\n  - Expenditure (% GDP): 29.0 (2020); 28.3 (2021); 26.8 (2022)\n  - Overall fiscal balance (% GDP): -4.5 (2020); -4.2 (2021); -3.5 (2022)\n  - Gross public sector debt (% GDP): 61.0 (2020); 59.8 (2021); 60.1 (2022)\n- Balance of payments\n  - Current account balance (% GDP): 2.4 (2020); 0.0 (2021); -0.3 (2022)\n- Exchange rate\n  - REER (% change): -7.6 (2020); …\n\nIMF Communications Department press release, November 5, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Mexico and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/11/05/pr21323-mexico-imf-executive-board-concludes-2021-article-iv-consultation-with-mexico"
    }
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    "Published: November 5, 2021",
    "The Mexican economy is rebounding from its deepest recession in decades, driven by strong U.S. growth and the pandemic-related re-opening of sectors.",
    "After shrinking 8.3 percent in 2020, real GDP is forecast to grow by 6.2 percent in 2021 and 4 percent in 2022.",
    "The current account, which jumped to a record surplus of 2.4 percent of GDP in 2020, has moderated and is nearly balanced.",
    "Broad money growth: 13.4 percent (2020), 9.2 percent (2021 proj.), 6.6 percent (2022 proj.).",
    "Credit to non-financial private sector (% change): 1.5 (2020), 3.3 (2021 proj.).",
    "There have been over half a million excess deaths.",
    "Under-employment remains very high.",
    "Poverty that was high before the pandemic has increased further.",
    "The young have experienced sizable learning losses with potentially harmful long-term consequences.",
    "Poverty headcount ratio (% of population, 2020): 43.9",
    "The government has emphasized a conservative fiscal stance with a focus on containing debt.",
    "Overall deficit target: 4.2 percent of GDP in 2021.",
    "Increased allocations for health spending and public investment in 2021.",
    "Efforts to combat tax evasion have contributed to generally better-than-expected revenues.",
    "Gross debt of the public sector (by staff’s definition) is estimated at about 60 percent of GDP.",
    "With inflation well above its target, the central bank has raised the policy rate to 4.75 percent.",
    "Consumer prices, end of period (%): 3.2 (2020), 5.9 (2021 proj.), 3.1 (2022 proj.).",
    "Consumer prices, period average (%): 3.4 (2020), 5.4 (2021 proj.), 3.8 (2022 proj.).",
    "1-month Treasury bill yield (in percent): 5.3 (2020), N.A. (2021 proj.).",
    "Banking sector: strong capital positions; nonperforming loans are relatively low at 2.4 percent of total loans (as of May 2021).",
    "International reserves: 199.1 (US$ billions, 2020), 211.8 (2021 proj.), 221.5 (2022 proj.).",
    "Gross international reserves in months of next year's imports of goods and services: 4.6 (2020), 4.8 (2021 proj.).",
    "Total external debt (% GDP): 43.1 (2020), 36.8 (2021 proj.), 36.4 (2022 proj.).",
    "Foreign direct investment (% GDP): 2.3 (2020), 1.9 (2021 proj.).",
    "Directors commended authorities for maintaining economic stability through a challenging period, underpinned by very strong macroeconomic policies and institutional policy frameworks.",
    "Given economic scarring risks and Mexico’s low long run growth performance, Directors underscored the need to safeguard the recovery and promote stronger, more inclusive, and greener growth.",
    "Fiscal policy:",
    "Monetary policy:",
    "Structural and sectoral recommendations:",
    "Population (millions, 2020): 127.8",
    "GDP per capita (U.S. dollars, 2020): 8,403.6",
    "Quota (SDR, millions): 8,912.7",
    "Main export products: cars and car parts, electronics, crude oil",
    "Main import products: cars and car parts, electronics, refined petroleum",
    "Key export markets: United States, EU and Canada",
    "Key import markets: United States, China, EU",
    "Output",
    "Employment",
    "General government finances",
    "Balance of payments",
    "Exchange rate",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Mexico and the IMF](http://www.imf.org/external/country/MEX/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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