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A quarterly magazine of the IMF	September 2007, Volume 44, Number 3

Country Focus

Mexico

Mexico enjoys sustained growth and stability thanks to sound economic policies. Its challenge now is to undertake further reforms to accelerate growth and reduce poverty while compensating for a likely decline in oil revenue.

Since 2000, growth has averaged about 3 percent, and Mexico's business cycle has become increasingly linked to that of the United States. After falling for several years as Chinese exports soared, Mexico's share of imports has stabilized in its most important market - the United States. The current account deficit has almost disappeared, thanks to rising oil prices and growing remittances. Public debt rations have been reduced because of fiscal discipline and increasing oil revenues. But tax revenue has been very low and must rise to offset a likely decline in oil income... ... and to pay for investment and social outlays needed to boost growth and reduce poverty.

Sources: Haver Analytics, Mexican authorities, and IMF staff estimates.