Boosting growth and reducing informality in Mexico

Mexico has embarked on a bold package of structural reforms that will help it to break away from three decades of slow growth and low productivity. Major structural measures have been legislated to improve competition, education, energy, the financial sector, labour, infrastructure and the tax system, among many, and implementation has started in earnest. If fully implemented, these reforms could increase annual trend per capita GDP growth by as much as one percentage point over the next ten years, with the energy reforms having the most front-loaded effects. Beyond this, a second wave could go further to tackle other structural bottlenecks. These challenges include reducing stringent regulation – particularly at the local level – and addressing corruption and weak enforcement of legal rights. The justice system is often slow and inefficient. And in the agricultural sector, strict land use restrictions and the structure of subsidies promote inefficiency. Moving even closer towards OECD best practices could increase potential growth by another percentage point annually.