Weekly Chart: Oil and Remittances in Mexico's GDP

By Holly K. Sonneland

The rise in remittances is putting more pesos in Mexicans’ pockets.

Remittances have been a buoy for the Mexican economy, rising 18 percent over the last five years while oil revenues from both crude and refined products fell by 68 percent in the same period. As of 2017, remittances have not just overtaken oil as a greater share of Mexican GDP, but the gap is only expected to widen in coming years. Though auto parts and tourism still bring in more money for the Mexican economy than the other two sectors, remittances' leapfrogging of oil is remarkable for one of the world's top ten oil producers. Mexico receives the fourth largest amount of remittances in the world, after India, China, and the Philippines.

The rise in remittances is putting more pesos in Mexicans’ pockets, and as a result, private consumption has been the main driver of GDP growth during the last two years, especially as the government, with less oil cash on hand, has had to scale down public consumption and investment.

As Mexico prepares to host the next round of NAFTA talks from September 1 to 5 in Mexico City, here’s a look at the country’s bottom line.