Economy of Mexico

Lore & Background

The Mexican economy is a developing mixed economy, ranking as the thirteenth largest globally by nominal GDP and purchasing power parity as of 2026. It is characterized by rapidly modernizing industrial and service sectors with increasing private ownership. Since the economic crisis of 1994, successive administrations have strengthened macroeconomic fundamentals, reducing inflation and interest rates to historic lows. The economy was largely insulated from the 2002 South American crisis and maintained modest growth after a brief stagnation in 2001, but it was among the hardest-hit Latin American nations during the 2008 recession, with GDP contracting by over 6%. Mexico’s social expenditure is the lowest among OECD countries, at roughly 7.5% of GDP, and its tax revenues, at 19.6% of GDP in 2013, were also the lowest in the OECD. The labor force numbered 52.8 million in 2015; Mexican workers are ranked by the OECD and WTO as the hardest-working globally by annual hours, though pay per hour remains low. The economy is highly unequal: 0.2% of the population holds 60% of the nation’s wealth, while 38.5 million people lived in poverty as of 2024. Significant gaps persist between urban and rural populations, northern and southern states, and rich and poor. Key unresolved issues include infrastructure upgrades, tax system and labor law modernization, and reducing income inequality. The lack of formal employment, limited access to financial services, and corruption have constrained productivity growth, while a low proportion of women in the workforce and reduced investment since 2015 have dampened medium-term prospects. As an export-oriented economy, over 90% of trade occurs under free trade agreements with more than 40 countries, most notably the United States–Mexico–Canada Agreement (USMCA), effective 2020. In 2006, trade with the United States and Canada accounted for nearly 90% of exports and 55% of imports. Recent reforms have expanded competition in ports, railroads, telecommunications, electricity generation, natural gas distribution, and airports, and Congress has approved significant tax, pension, and judicial reforms. In 2023, Mexico had 13 companies on the Forbes Global 2000 list.

Reader's Guide

The Mexican economy is a developing mixed economy, ranking as the 13th largest globally by both nominal GDP and purchasing power parity as of 2026. Its modern industrial and service sectors are rapidly expanding, with private ownership increasing. Administrations since the 1994 crisis have strengthened macroeconomic fundamentals, achieving record-low inflation and interest rates. However, Mexico was among the Latin American nations hit hardest by the 2008 recession, with GDP contracting over 6% that year. The country maintains the lowest social expenditure among OECD nations, at roughly 7.5% of GDP. Significant disparities persist between urban and rural areas, northern and southern states, and the wealthy and poor. Unresolved issues include infrastructure upgrades, tax system and labor law modernization, and reducing income inequality. Tax revenues, at 19.6% of GDP in 2013, were the lowest in the OECD. Poverty remains high, with 38.5 million people living in poverty in 2024, and 0.2% of the population owning 60% of the wealth. The labor force numbered 52.8 million in 2015, and Mexican workers rank as the world’s hardest-working by annual hours, though hourly pay is low. The economy is export-oriented, with over 90% of trade under free trade agreements, most influentially the USMCA. Recent reforms have expanded competition in ports, railroads, telecommunications, and energy sectors. Historically, the Porfiriato saw rapid growth fueled by foreign investment and railroads, but extreme land inequality—97% of arable land owned by 1% of the population—fueled the Mexican Revolution. The post-revolutionary Mexican Miracle (1940–1970) saw GDP increase sixfold under import substitution industrialization, with land redistribution, nationalization of oil and railroads, and infrastructure upgrades. The 1970s oil boom led to heavy borrowing, but subsequent price drops triggered crises. Low formal employment, limited financial access, corruption, low female workforce participation, and weak investment since 2015 have constrained productivity and medium-term growth prospects.

Did You Know?

• Mexico has the lowest social expenditure among OECD countries, at roughly 7.5% of GDP.
• 0.2% of Mexico's population owns 60% of the country's wealth.
• Mexican workers are ranked by the OECD and WTO as the hardest-working in the world in terms of hours worked yearly.
• More than 90% of Mexican trade is under free trade agreements with over 40 countries.