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Macroeconomics Performance and Policies of Mexico Coursework

Macroeconomic Performance during the Years from 2011 to the Present

Mexico is one of the most well-known places in Latin America, and its economy is among the largest ones. The global economy constantly changes and, along with alterations in governmental policies, affects the macroeconomic performance of Mexico significantly.

Focusing on the available data, a description of changes observed during the years from 2011 to the present can be provided. For instance, Mexican GDP used to be $1 171,19 billion and increased step by step until 2014 ($1 298,47). Further, reductions were observed, and GDP reached $1 142,45 billion. The same alterations were observed in the framework of GDP per capita that was $10 124,10 and became $8 562,16 in 2016. Fortunately, it started improving this year and has already reached $9 249,27. The inflation rate in 2011 was 3,40%, and it has both reduced and increased during these 6 years. In 2015, it reached 2,70%, but today it is already 5,90%. However, statistical data reveals that Mexico manages to cope with unemployment. Even though changes are not always outstanding, they are rather stable. In 2011, 5,20% of the population had no official source of income while this year these numbers have already reduced to 3,60%. Government net lending used to be -3,40% and reached -4,606% in 2014, but it is -1,40% now. Current account balance was $-13,23 billion in 2011, $-31,08 billion in 2013, and is %-19,81 today (“Mexico: Country Data”).

The revealed data proves that Mexico tries to enhance its macroeconomic performance in order to benefit its population. However, this path is rather complicated and full of obstacles that are to be considered by the governmental bodies. Professionals should investigate the discussed tendencies to develop a range of changes that can benefit the country.

Future Macroeconomic Performance and Associated Issues

Today, Mexico realizes its issues and tries to implement those changes that are likely to improve its macroeconomic performance and benefit the representatives of the general public. Even though this way is not easy and the country continues facing various issues, particular positive forecasts are already made by analysts who have much experience in this sphere. For instance, professionals believe that GDP will be $ 1 249,97 billion in 2018, $1 321,34 billion in 2019, and $1 392,92 in 2020. GDP per capita is likely to change in a similar way so that it will be $10 020,80 in 2017, $10 492,69 in 2019, and $10 959,93 in 2020. Professionals believe that government net lending will reach -2,50%, which is a great change as the expected difference is more than -1% (“Mexico: Country Data”). Nevertheless, it is presupposed that no other alterations will be observed during the next 3 years, which provides an opportunity to presuppose that currently this issue is not that critical and its solution can be postponed for some time without any adverse influences. Changes considering current account balance US dollars are not stable yet. Additional research is needed to discuss this point further. For now, attention can be paid to the other statistical data.

Analysts believe that the inflation rate will reduce significantly over the course of time. In particular, they state that it will be 3,80% in the next year, 3,10% in 2019, and 3,00% in 2020. However, this alteration presupposes that the inflation rate will reduce by 2,10% between 2017 and 2018 (“Mexico: Country Data”). Unfortunately, this change does not seem to be real because of the extreme difference between these data. That is why it is possible to claim that inflation is one of the important macroeconomic issues that are to be solved in the future. A lot of attention should be paid to the unemployment rate, as it shows whether the population of Mexico is officially employed and has enough money to meet its basic needs. Surprisingly, analysts consider that it will increase by 0,10% in the next year. Even though they believe it will be 3,60% and 3,50% later, expected changes reveal that unemployment is another critical macroeconomic problem that Mexico tries to cope with but fails to do it successfully.

Thus, it can be concluded that inflation and unemployment are those issues that are to be discussed by the Mexican government as soon as possible. The country has already achieved much improvement in this framework, but observed alterations are not enough to ensure that the current condition will not worsen with the course of time (“Mexico: Resilient Economy AMID Persistent US Policy Uncertainty”). Realizing that many adverse outcomes can be experienced by the population, a thorough discussion of possible solutions should be made.

Improvement of the Country’s Macroeconomic Performance

In order to improve its macroeconomic performance, the government of Mexico should pay more attention to those issues that currently affect the country adversely. In particular, ways to reduce inflation and unemployment rates should be considered. It is expected that the implementation of contractionary monetary policy and fiscal policy can help to reach this goal.

Inflation seems to have some positive influence on the economy because it presupposes growth associated with increased spending. Nevertheless, this alteration makes traders raise prices so that the value of the currency decreases. As a result, the exchange rate weakens as well. Control of inflation is managed in different ways, but some of them have negative consequences. The implementation of the contractionary monetary policy, in its turn, seems to be rather beneficial, as it causes a reduction of spending through the increased bond prices. In addition to that, it also increases interest rates and reduces available credit. To carry out this policy, the government can consider one of the following methods. Firstly, it can make banks increase their rates with the help of the Federal Reserve. Secondly, reverse requirements can be reconsidered. As a result, the amount of money that is to be held by banks can be increased. Thus, clients do not have an opportunity to land more money and buy more, so traders reduce prices. Finally, it is possible to enact additional policies, such as the one that calls in debts.

Unemployment affects macroeconomic performance as it prevents from spending. Having no salaries, they become not capable of purchasing anything, which slows economic development. The government can solve this issue in different ways, and fiscal policy is one of those changes that can be implemented to overcome the discussed issue. It is targeted at the increase of aggregate demand through the decrease of taxes. Disposable income will become higher, so people will be able to purchase more. Even though this strategy presupposes increased governmental spending, it is still advantageous for Mexico. Decreased taxes and improved aggregate demand will provide more firms with an opportunity to continue working so the number of vacancies will not reduce and may raise with the course of time.

Works Cited

Euler Hermes. “Mexico: Resilient Economy AMID Persistent US Policy Uncertainty.” Euler Hermes, 2017, Web.

The Economist Intelligence Unit, Web.

International Monetary Fund, Web.

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IvyPanda. 2020. "Macroeconomics Performance and Policies of Mexico." December 25, 2020. https://ivypanda.com/essays/macroeconomics-performance-and-policies-of-mexico/.


IvyPanda. (2020) 'Macroeconomics Performance and Policies of Mexico'. 25 December.

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