The economy of Mexico is the 11th largest in the world. Since the 1994 crisis, administrations have improved the country’s macroeconomic fundamentals. Mexico was not significantly influenced by the recent 2002 South American crisis, and has maintained positive rates of growth after a brief period of stagnation in 2001. Moody’s (in March 2000) and Fitch IBCA (in January 2002) issued investment-grade ratings for Mexico’s sovereign debt. In spite of its unprecedented macroeconomic stability, which has reduced inflation and interest rates to record lows and has increased per capita income, enormous gaps remain between the urban and the rural population, the northern, central, and southern states, and the rich and the poor although there has been a large growing middle class since the mid 1990’s. Some of the government’s challenges include the upgrade of infrastructure, the modernization of the tax system and labor laws, and the reduction of income inequality.
The economy contains rapidly developing modern industrial and service sectors, with increasing private ownership. Recent administrations have expanded competition in ports, instant payday loans, telecommunications, electricity generation, natural gas distribution and airports, with the aim of upgrading infrastructure. As an export-oriented economy, more than 90% of Mexican trade is under free trade agreements (FTAs) with more than 40 countries, including the European Union, Japan, Israel, and much of Central and South America.
The most influential FTA is the North American Free Trade Agreement (NAFTA), which came into effect in 1994, and was signed in 1992 by the governments of the United States, Canada and Mexico. In 2006, trade with Mexico’s two northern partners accounted for almost 50% of its exports and 45% of its imports. Recently, the Congress of the Union approved important tax, pension and judicial reforms, and reform to the oil industry is currently being debated. According to the Forbes Global 2000 list of the world’s largest companies in 2008, Mexico had 16 companies in the list.
Mexico has a free market mixed economy, and is firmly established as an upper middle-income country. It is the 11th largest economy in the world as measured in gross domestic product in purchasing power parity. According to the latest information available from the International Monetary Fund, Mexico had the second-highest Gross National Income per capita in Latin America in nominal terms, at $9,716 in 2007, and the highest in purchasing power parity (PPP), at $14,119 in 2007.