Informality grew to 24.5% of GDP in 2024

The participation of the informal economy in Mexico reached a new maximum, contributing 25.4 percent of the national gross domestic product (GDP), revealed the National Institute of Statistics and Geography (Inegi).

The Institute, which published this Wednesday the preliminary Measurement of the Informal Economy (MEI) 2024, specified that from 2013 to 2017 the participation of the informal economy in the GDP gradually decreased, from 23.4 percent to 22.8 percent and in 2018 it remained at 22.8 percent.

From there, with the exception of the year in which the covid-19 pandemic began (2020, with 22.2 percent), its contribution has increased year after year, reaching 25.4 percent, the highest proportion since the series began in 2003, and surpassed the record of 2009, when the contribution to the economy was 24.2 percent.

Thus, from 2018 to 2024 the participation of the informal economy increased 2.6 percentage points of GDP.

According to Inegi, the population employed informally amounted to 31.8 million people (more than half). Meanwhile, there are 27.5 million jobs in the formal sector.

The MEI revealed that while 54.4 percent of people employed in the informal economy produced only 25.4 percent of the GDP, those employed in the formal economy (45.6 percent) contributed 74.6 percent of the GDP.

Analysts assured that the growing weight of the informal economy is a burden on productivity, public finances, social security, benefits and the companies themselves.

The Inegi estimated that the informal economy grew more than the formal one in real terms; that is, 4.3 percent annually in 2024 against 0.5 percent. Thus, the Mexican economy reported growth of 1.4 percent annually in 2024.

He explained that the informal economy is made up of the informal sector, which includes all the economic activities carried out by companies without legal personality owned by households, and other modalities of informality (formal economic units whose workers do not have social security or social benefits, such as vacations, bonuses or severance payments, among others).

In 2024, of the total informal economy, the informal sector (SI) contributed to GDP with 14.5 percent and other modalities of informality (OMI), with 10.9 percent.

Informal retail trade increased its share from 28.9 to 29 percent; construction, from 14.7 to 15.6 percent; other services, except government activities, from 6.1 to 6.4 percent; and transportation, mail and storage, from 4.1 to 4.3 percent.

On the other hand, in the agricultural sector it decreased from 11.6 to 11.1 percent; in manufacturing industries, from 13.5 to 13 percent; and in wholesale trade, from 7.1 to 6.8 percent.

In the informal sector, retail trade decreased its contribution to GDP from 44.1 percent in 2023 to 43.5 percent in 2024 and in construction it increased from 24.3 to 25.5 percent. Together, they both contributed 68.4 percent in 2023 and 69 percent in 2024.