Historical Encyclopedia
Mexico, the second largest economy in Latin America, has a diverse and evolving economy. The country has historically served as an important trade and industrial hub, playing a key role in global supply chains and transcontinental exchanges. Mexico's economy combines elements of traditional sectors such as agriculture with dynamically developing areas such as industry and high technology. In recent decades, the country has significantly developed its infrastructure, increasing the production and export of various goods and services.
Mexico has one of the most diverse economies in Latin America. The country has a developed agricultural sector, but in recent years, the focus has shifted to industry, particularly automotive, electronics, petrochemical, and chemical industries. Agriculture, despite its declining share of GDP, still remains an important part of the country’s economy, ensuring food security and being a significant exporter of products such as corn, wheat, coffee, and avocados.
The industrial sector is one of the most dynamically developing. In particular, the automotive industry is a major driver of Mexico's growth, as the country acts as the largest car manufacturer in Latin America. Mexico is also an important center for electronics manufacturing, especially for American companies that establish factories here for assembling televisions, mobile phones, and other electronic devices.
Services also play an important role in the country's economy. The sectors of finance, tourism, information technology, and healthcare continue to grow and attract investment. Tourism, in particular, is one of the leading sources of income for the country, with annual revenues from foreign tourists amounting to billions of dollars.
In 2023, Mexico remained the second largest economy in Latin America after Brazil, with a GDP exceeding $1.3 trillion. The Mexican economy has been subject to fluctuations caused by internal and external factors, including changes in oil prices and the COVID-19 pandemic. However, in recent years, the country's economy has shown recovery due to growth in sectors such as manufacturing, services, and trade.
GDP per capita in Mexico is around $10,000, placing the country in the group of developing economies, despite significant social disparities and income inequality.
Mexico is an important player on the international stage, thanks to its geographical location and status as a major trading partner of the United States. The country is part of several key trade agreements, including the North American Free Trade Agreement (NAFTA), which was replaced by the United States-Mexico-Canada Agreement (USMCA) in 2020. This agreement continues to play an important role in Mexico's economic integration with neighboring countries, providing access to American and Canadian markets.
Oil and petrochemical trade is also an important source of income for Mexico. The country remains one of the world's largest oil exporters, despite declining production and the deteriorating state of state-owned oil companies. Mexico is actively diversifying its economic ties, developing relationships with China, the European Union, and other Latin American countries.
The monetary policy system in Mexico aims to keep inflation low, contributing to the stability of the economy. The Bank of Mexico, Banco de México, uses various tools to manage inflation, including adjusting interest rates. Since the 1990s, inflation in Mexico has significantly decreased, and although there are sometimes short-term price fluctuations, Mexico generally shows moderate inflation of around 4-5% in recent years.
However, Mexico's monetary system faces challenges related to currency instability, especially during periods of global economic upheaval. The exchange rates of the Mexican peso can fluctuate depending on international market conditions, affecting economic stability and trade relations.
The oil and gas sector is an essential component of Mexico's economy, being the largest source of revenue for the country over the past few decades. The country is one of the world's largest oil producers and actively exports hydrocarbons, including to the United States and other countries. However, in recent years, oil production in Mexico has been declining due to the depletion of old fields and challenges faced by the state-owned oil company Pemex.
Nevertheless, the oil and gas sector remains key, and the Mexican government continues to implement reforms to improve the industry's productivity and attract private investment and innovative technologies. This is crucial for both increasing domestic production and strengthening the country's position in international markets.
Despite the growing economic potential, Mexico faces a number of social issues related to poverty, inequality, and low living standards in some areas. Although the share of poor people in the country has decreased over the past few decades, a significant portion of the population still struggles to access basic social services such as healthcare and education.
Inequality in Mexico remains one of the major social issues. The gap between rich and poor regions continues to grow, especially in rural and remote areas. The government is taking steps to improve social infrastructure and increase public spending to combat poverty, but the challenges remain substantial.
Mexico continues to evolve as one of the leading economies in Latin America, attracting significant domestic and international investment. Leading economic sectors such as automotive, electronics, and petrochemicals drive growth; however, the country also faces pressures related to social instability and environmental issues. Mexico will continue to work on improving infrastructure, supporting innovative technologies, and creating jobs, which will contribute to further economic progress.
Key factors that may influence the country’s economic future include the continuation of reforms in the oil and gas sector, attracting foreign investments, and supporting sustainable growth in agriculture and services. Overall, Mexico has great potential for sustainable development despite the existing challenges.