Mexico's weak GDP growth will outlast Pena Nieto

Subject

GDP growth shows no sign of improving in the short-term.

Significance

In its most recent update to its World Economic Outlook, the IMF lowered its forecast for Mexico's 2016 GDP growth to 2.4% from 2.6% foreseen in January. This figure compares well with other Latin American countries -- notably Brazil and Venezuela -- yet it marks the continuation of a trend of meagre expansion that has characterised President Enrique Pena Nieto's time in office despite his efforts to introduce economic reforms.

Impacts

• Further reform to encourage greater flexibility in the labour market will be key to increasing small business productivity.
• Low growth and a lack of prospects for the young will feed into Mexico's rising crime rates.
• The lack of growth could become a severe problem for the government both directly and indirectly in the 2018 election.