With a population of nearly 130 million people, a rich cultural history, great diversity, and a favorable geography with abundant natural resources, Mexico ranks among the fifteen largest economies in the world and is the second largest in Latin America. The country has strong macroeconomic institutions, an open trade policy, and a diversified manufacturing base integrated into global value chains.
Over the past three decades, Mexico has underperformed in terms of growth, inclusion, and poverty reduction compared to similar countries. Between 1980 and 2022, the economy grew by just over 2% annually on average, limiting progress in closing the gap with high-income economies.
Yet, the official multidimensional poverty rate in Mexico, which assesses income poverty alongside six indicators of social deprivation, fell from 43.2 percent in 2016 to 36.3 percent in 2022, lifting 5.4 million people out of poverty, driven mainly by labor market outcomes, including increases in the minimum wage.
Mexico’s economic growth is projected to stall in 2025, with a gradual recovery reaching 1.8 percent by 2027—still below the average growth rate of the past three years. This is mainly due to anticipated uncertainty surrounding potential shifts in trade policy, the upcoming revision of the USMCA, and the expected slowdown of the U.S. economy.
With gradual growth improvements expected by 2027, the poverty rate is projected to decline. Unlocking Mexico’s full economic potential will require strengthening the drivers of growth. Spending pressures will call for revenue-enhancing actions to protect debt sustainability in a lower growth environment, along with greater private sector participation to meet investment needs, particularly in infrastructure. In the near term, it will be essential to navigate a turbulent trade and investment landscape and plan for greater trade resilience.
Last Updated: Apr 23, 2025
