Mexican Economy

Mexico Economy

Despite the fact that Mexico has a well-developed and stable economy in general, there is still an obvious difference between the rich and the poor, the north and the south, as well as between urban and rural areas. These differences will continue to grow unless they are taken care of. The percentage of population in extreme poverty has decreased between 2000 and 2004, but income inequality remains a problem. This inequality problem needs to be attended in order for Mexico to improve its economy and avoid political and social instability.

Mexico's GDP passed the trillion-dollar mark in 2004. Therefore, it has become one of the major middle-income countries that have an advanced economy. It is the 12th largest economy in the world and, according to the World Bank, and it has the highest Gross National Income per capita in Latin America. Goldman Sachs' recent study of emerging economies predicted that by 2050 Mexico will hold one of the largest economies in the world, alongside China, United States, India, Japan and Brazil. As for the Mexican Peso, its exchange rates are high, therefore the country has the highest purchasing power parity of the countries in Latin America.

In 1994, Mexican economy was put to the test, but it has recovered and now it is modern, diversified, with recent administrations improving infrastructure. Moreover, there is intense competition in seaports, railroads, telecommunications, airports, electricity generation, as well as natural gas distribution.

Mexico is part of the North America Free Trade Agreement (NAFTA), so almost 90% of Mexico's export goes to the United States and Canada, while 65% of the country's imports come from these two. Mexico is in agreement with the European Union, Japan, Israel and other countries in Central and South America as well, making it an important part of international trade, as it is the 15th largest exporter in the world, 10th if the European Union is considered a single entity. When it comes to Mexico's largest source of foreign income, oil holds first place.

Mexico's main concerns are keeping interest rates and levels of inflation low, although, like other countries, Mexico was affected by rising prices in oil, food and commodity in 2008. The infrastructure needs to be improved as well. The industry is a combination of businesses that are advanced technologically speaking and industries that are in need of reform, with the private sector taking up an increasingly important role in agriculture and industry as well.

Further reading on EconomyWatch.com:

Overview of Mexican Economy

Imports and Exports of Mexico

Economic Structure of Mexico