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OECD Economic Surveys: Mexico 2007

image of OECD Economic Surveys: Mexico 2007

This edition of OECD's periodic economic survey of Mexico examines key challenges Mexico faces in the medium-term including strengthening public finances, maximising the gains from integration into the world economy, improving infrastructure (including transport, telecommunications, electricity, and natural gas), and creating more and better jobs to alleviate poverty.

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Assessment and recommendations

Mexico has implemented a wide range of reforms to liberalise the economy and open it to foreign trade and investment, starting in the late 1980s. Its macroeconomic performance has improved significantly and GDP growth averaged 3.6% per year since the 1995 peso crisis. In 2006, growth reached a robust rate of 4.8%, underpinned by buoyant exports and strong investment. However, activity is expected to slow this year and next, with GDP growth around its potential rate, estimated to be between 3½ and 4%. This growth rate, given population growth of around 1.3% per year, is too low to allow convergence of Mexico’s income per capita towards the living standards of the more advanced OECD countries. In 2005, the average income of the Mexican population was still one of the lowest in the OECD and only about one-fourth that of the United States (in purchasing power parity). While labour utilisation is not far from the OECD average, labour productivity has grown at too slow a pace to catch up from its initial low level.

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