Mexico's economy is likely to continue growing in Q4, but firms should expect a slowdown in 2023 stemming from global and domestic headwinds

Q3 data surprises to the upside, improving the outlook for 2022, but firms should remain cautious ahead of 2023

Mexico’s economy continues to positively surprise despite current global and domestic headwinds. Against the backdrop of a cooling US economy, China’s COVID lockdowns, Putin’s invasion of Ukraine, and ongoing regulatory uncertainty at the domestic level, the economy will grow more than 2% in 2022, better than the 1.8% forecasted at the beginning of the year. Yet, as firms assess their strategic plans for 2023, they should expect lower growth in 2023 (1.1%) as Mexico’s current economic engines, exports and consumer spending, will be mainly impacted by the upcoming US recession.


Mexico’s economy grew by 4.3% YOY in Q3 on the back of the secondary (4% YOY) and tertiary (4.3% YOY) sectors. Exports and consumption continue to shore up the economy, the two GDP components that have greatly benefited in Q3 from the US economic expansion. The better-than-expected Q3 numbers have shifted our view toward the upside in 2022, meaning Mexico is poised to grow between 2.1% to 2.5%.

Our View

By examining the positive performance of the economy amid the current global context, two key items come front and center. Exports have been performing quite well, having a strong Q3 as US demand remained resilient. For example, in August, exports grew by 25% YOY (worth US$ 50.6 billion), mainly driven by manufactured goods, which grew by 27% YOY (worth US$ 45 billion), and oil, which grew by 19.7% YOY (worth US$ 3.2 billion). Moreover, in another surprise to the upside, auto exports have grown by 5% YOY throughout 2022 (roughly 2 million units more than 2021 insofar), though Mexico’s auto industry continues to cope with microchip shortages stemming from supply chain disruptions. Besides the good performance of exports, consumer spending has remained resilient on the back of a recovery of the labor market, a high volume of remittances, and a dynamic service sector, particularly the hospitality industry, which has benefited from more tourists visiting Mexico in 2022. From January to August, tourist arrivals amounted to 42 million (20% YOY), worth US$ 18.6 billion (58% YOY), thus Mexico is not only receiving more tourists, they are also spending more. Moreover, the volume of remittances continues to shatter previous record years, helping bolster consumer spending across the whole Mexican territory. From January to August, Mexico received US$ 37.9 billion (15% YOY) in remittance inflows stemming from a still-resilient US labor market. All these positive numbers are the backstory of Mexico’s growth in 2022. Yet, for 2023, we continue to see a different environment, where lower growth should be expected, meaning tempered expectations for Mexico’s economic performance, which is likely to be better than other LATAM economies but unlikely to be the positive story of 2022. Hence, as executives gear up to face a challenging 2023 that will be characterized by inflationary pressures, domestic regulatory uncertainty, the ongoing war in Ukraine, and a US recession, they should continue betting on Mexico, as its fundamentals remain strong, using scenario planning to meet growth mandates.

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