Washington, D.C. - Mexico's economy continues to grow at a moderate pace, despite an array of external challenges, including a collapse in oil prices and heightened volatility in international financial markets, the International Monetary Fund said in its annual assessment of the Mexican economy.

Economic activity has remained resilient despite the difficult external environment. Growth is expected to reach 2.2 percent in 2015, and accelerate to 2.5 percent in 2016, thanks to stronger exports to the United States and robust domestic demand. The unemployment rate fell to a post-crisis low of 4¼ percent in the second half of 2015.

The rise in global financial market volatility and a portfolio shift away from emerging markets caused a sharp depreciation of the peso vis-à-vis the U.S. dollar over the past year. Nonetheless, inflation remains low, and the yields on domestic currency bonds have been relatively stable.

As a highly open economy, with large participation of foreign investors in the domestic bond market, Mexico remains exposed to external shocks. However, the positive growth outlook and strong policy frameworks increase the country's resilience and ability to withstand financial market stress.

Mexico's growth prospects are very favorable: the implementation of far-reaching structural reforms is expected to lift potential growth to 3-3½% over the medium term.