Mexico has become the main import provider to the United States
Tax revenues are low
Productivity has been low
There is room to increase female labour market participation
The share of low-income households overburdened by housing costs is high
GDP growth has been resilient, supported by ongoing nearshoring
Inflation is lower than in OECD or regional peers
Mexico’s potential to be a high-growth economy remains unrealised
The share of renewable energy is lower than in OECD or regional peers
There is room to improve education outcomes and close gender gaps
Real incomes and consumers’ confidence support consumption
Investment is picking up
Exports remain resilient
Mexico’s exports are concentrated in the United States with imports more diversified
The labour market remains strong
The current account deficit is financed with a stable flow of foreign direct investment
External debt has fallen and the level of international reserves is comfortable
Sovereign risk premia have trended down
The monetary policy stance remains tight
Inflation has softened
Inflationary pressures remain particularly high in processed food and some services
The exchange rate has appreciated
Banks capital and liquidity ratios are high
Credit growth has gradually recovered
Private debt is low
The deficit and public debt levels are low in international comparison
Fiscal policies have remained prudent
The public debt-to-GDP ratio is expected to remain broadly stable
Public investment has recently increased but remains low
Public spending is low in comparison with other OECD countries
Spending on pensions is trending up while spending on education has fallen
Mexico has the lowest tax-to-GDP ratio in the OECD
Mexico derives the highest share of its tax revenues from value added taxes
There is room to strengthen immovable property and environmentally related taxes
Northern and central regions benefited from increasing trade integration
Backward participation in global value chains is high and increasing
Forward participation in global value chain remains low
Mexican SMEs have low productivity and few of them export
There is room to improve logistics
Services trade restrictions are high, particularly in logistics
Mexico lags in broadband
Regional differences in digital connectivity are large
Regulatory burden remains high and heterogenous across states
Enforcement of existing legislation is low
Crime remains high
Public security and uncertainty about domestic policies are perceived to limit growth
Corruption perceptions remain high
Energy and transport sectors are the largest emitters
The share of electricity generated from renewable sources is low
Income inequality and poverty have recently fallen but extreme poverty less so
Many students leave the education system before completing secondary education
Education quality lags and regional differences are large
There is room to further increase the share of tertiary graduates
Female labour force participation is low
Mexico has much to gain from closing gender participation gaps
Enrolment in early education for the youngest is low
More than half of private houses in the poorest regions are substandard
Housing overcrowding is prevalent
A large share of the housing stock needs home improvement
Access to an adequate house is associated with location, income and education
Real housing prices in Mexico increased but less than in some regional peers
Housing costs for low-income households are very high in Mexico
House prices have increased faster than rents
Most Mexicans are homeowners
Low-income households have limited access to housing credit
The demand for dwellings is high, especially in urban areas
Land for increasing housing supply is scarce
Many Mexicans are unsatisfied with the time-distance to access urban services
Many urban areas still grow faster than population
Most houses are single-family
Residential investment is high in Mexico
More than 60% of housing is self-build in Mexico
Public spending on housing support is low in Mexico
Mexico applies a preferential tax treatment to debt-financed homeownership
The average height of buildings is low
Transport is expensive in Mexico
The use of private cars is low in Medellín